For some individuals, investment banking is one of the ventures that they wanted to explore – not just because everyone’s into it, but also because there is a huge success percentage involved in this type of activity. But before anything else, and before you even get too excited and think about the gadgets you’re about to get, you might want to consider whether you like to work with private or public clients. This is mainly because there are factors to be taken into account, especially when it comes to public and private company M&A.
Depending on your skill set and your experiences, people may have their own perspective on which companies they should invest to and work for. But first and foremost, what’s the difference between public and private company M&A? Let’s first take a glimpse on what these two are, making it easier for you to make the right decisions in the near future.
Public Company – shares and stocks of public companies are available for everyone and are for sale. They are publicly sold in the stock market, and any investor may take into account whether they wanted to buy the stocks from that company or not.
Private Company – On the other hand, a private company’s stocks and shares are not available in the stock market. Certain considerations and documentations must be done for one to buy and get a percentage of the shares for that company. Unless you own the company, work for them or one of its founders, you cannot simply buy “shares” unlike in public companies.
These are the two general differences of public and private companies. But what does it have to do with mergers and acquisitions?
Unless you’re planning on doing investment banking for a huge corporation, investing and attempting to buy stocks from a private company seems impossible. Private Company M&A usually happens when the establishment has decided that they’re starting to slow down in terms of their revenues, and are looking for other ways where they can get back on track without losing from their competitors.
Sometimes, these establishments even offer to buy smaller yet threatening competitors and trying to see if they’d be interested in a merger or acquisition deal. Just like anything else, you have to know which industry you’re about to enter, and you have to learn what the consequences are – positively and negatively at the same time.
If you’re starting out, going for public rather than private M&A will be the best way to try everything out. You can get involved in mergers and acquisitions of shares with private companies, but you have to be pretty knowledgeable first before even entering this venture.
There are public companies that you can check out and buy shares from easily from the stock market. At least, you will have an idea on how the market actually works, and you will not get overwhelmed as soon as you have clients woking from a private company.
Get to know what your deals are. Have a better understanding on these differences and at least have legal knowledge and advice before finally making a decision. A simple mistake in this industry can lead you to bigger problems in the near future.