BY aarrieta
The big companies grow through buy out that means buying other companies.
The difference between the value of the public company compared to a private one, due to a matter of liquidity, makes a public company capable of buying a private one and instantly increase its public value just for the expectation of a higher pricing.
The companies are worth their expected value and growth in the future and not the real value of the company.
In our industry public companies need to show growth in order to keep their value. Public companies that don’t have a considerable size or an aggressive growing rate, it will be very difficult for them to survive in the capital market.
Private companies may prefer to be bought by the public ones, instead of reaching an IPO, where it could be very difficult to go public successfully and stay there.
