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Why Many Entrepreneurs Prefer to Maintain Private Companies

While the greatest of advantage of “going public” with your company is gaining access to considerable outside funding to grow and expand your business, it can also wind up forcing you to meet some often stringent requirements of both shareholders and government regulators. This is simply because the minute most people invest money in a company, they often want to start receiving quarterly reports that indicate how much money they’ve earned since their initial investment.  Other constraints are also imposed when you choose to issue an IPO (or Initial Public Offering).  

Here are some additional reasons that you and the others running your company may want to avoid “going public.”

Added Concerns You Can Avoid By Keeping Your Company Private

  • You can usually better protect your company “secrets.” Whether your company is involved with high-tech discoveries or rather general corporate business pursuits, it’s always wise to do what you can to preserve your “competitive edge.” This is often accomplished by maintaining a highly confidential business profile. Otherwise, your competitors may succeed in “stealing” some of your ideas;
  • You can maintain better individual liability protections. When you operate a private company, you have the option of extending limited liability protection to all of your directors and officers. As one article puts it, “Limited liability protects the personal wealth of a private company’s shareholders, and does not put personal assets at risk;”
  • You can hold on to the freedom of pursuing the short-and long-term planning issues you value you most. As generally referenced above, public companies must constantly be making plans to help them accurately project their upcoming earnings in keeping with public shareholder’s demands. This can be a very time-consuming and exhaustive process, often using up many critical company resources. In contrast, when companies can just do their planning based entirely on their current needs, it can be much easier to achieve critical goals that are unrelated to the demands of numerous outside investors;
  • A number of specific requirements of the Securities Exchange Act will not apply to your company. Although all companies require the expert guidance of a Peachtree City business law attorney, you’ll have far fewer state and federal statutory laws governing your company’s actions if you remain a truly private enterprise.

Of course, if your company is in dire need of additional funding, you may need to let this overriding concern dictate your actions.

To obtain help with handling all of your Georgia business planning needs, please contact the Law Offices of Shane Smith today.  You can schedule your free initial consultation with a knowledgeable Peachtree City estate planning attorney by calling: (770) 487-8999.


Shane Smith
Advocate for the Seriously Injured in Georgia