Poll: On Air
“Which private company do you most wish was public?”
- 50% IKEA. It would help furnish my portfolio
- 26% Mars. It would sweeten my portfolio
- 8%: Cargill. It’s the biggest PrivCo out there!
- 8% Ernst & Young. Accountants need to be accountable
- 8% Koch Industries. Don’t knock it
For the record, a public company is a company that’s chosen to list on a stock exchange. A private company is a company that’s chosen not to list on a stock exchange. Simples!
By a landslide, the Invstr community wants the world’s largest furniture store, IKEA, to join the Stockholm stock market! It was founded by a 17-year old named Ingvar Kamprad who, in the forties and fifties, didn’t see big Swedish prospects in going public.
Then there’s Mars, the candy brand behind Twix, Milky War, M&Ms, and countless other food brands. Having been around for over one hundred years, most investors assume that if Mars wanted to list on a stock exchange, it would have done it already.
Actually, the company’s chairman is a never say never type. However, for now, he admits he does like being able to fit all the company’s shareholders in one room.
Beyond Mars in our poll, though, it’s a three-way lockout! Agricultural firm Cargill, the largest private company of all, has weathered numerous calls for it to stage an initial public offering (IPO). The Koch brothers’ chemical conglomerate bats away those same cries with $115 billion revenues, and Ernst & Young also resolutely says “no” despite ironically providing transaction support for IPOs!
Alas, all of these companies remain exclusively owned and controlled by decedents of their founding fathers. So, why won’t they allow us onboard?
A business owner opts for privacy when they don’t want to sell their stake for instant funding, keen to protect their economic right to long-term profits. Their financials are kept under wraps, their every move isn’t analyzed by market pundits, and their quarters aren’t spent trying to appease the impatient. IKEA, Mars, and co. are also saving extra costs by not listing on a stock exchange.
Not only that, but these firms have all matured. Nearing its full growth potential, Mars already owns a good chunk of what’s in your local superstore. Ernst & Young employs 270,000 people, and Koch Industries turns eighty years old in February. These are not young, disruptive growth start-ups. They wouldn’t be able to create much value with the billion-dollar influx received from an IPO.
Some entrepreneurs start their new ventures with the sole ambition of debuting their firm on a stock exchange one day, selling out, and riding off into the sunset. Quickly departing insiders is a red flag for many investors, but every stock market success story has to start somewhere, right?
