The key differences between public and private companies mainly revolve around how exclusive both are and how each succeeds with respect to their public disclosure. A public company has full access to the public market in that any entity can invest in the company’s stocks, thereby enhancing the company’s liquidity and making it easier to sell shares. Private companies do not have this type of access and therefore have fewer investors as a result. A private company might favor this option of being privately exclusive for a few reasons, such as not being required to submit quarterly or annual financial statements required by the Security Exchange Commission (SEC). This avoids the costs of hiring or designating an accounting department for following the SEC regulations, which can actually be counterproductive if the private company receives no public interest from investors after already going public. If a private company does decide to go public, it has to undergo an initial public offering (IPO) written up by investment bankers that allows public access to the company’s financial records. The main advantage of public companies in this sense, is to provide market analysts with a proper evaluation regarding the company’s condition, which is more appealing to investors since they have more financial insight of the company. Investors actually value public companies over private ones for this reason.

A quick look at the top publicly-owned medical device companies yields results such as Johnson & Johnson, Medtronic, GE Healthcare, Siemens Healthcare, Becton Dickinson, and Stryker, all of which are well-known in terms of their success and global distribution. Privately-owned medical device companies are not as well known, the most successful ones being limited-liability corps (LLC) such as Active Medical LLC or Dynamite Therapy LLC. The company I currently work for is a privately-owned LLC (PCT Cell Therapy) that remains private because it carries out clinical procedures involving breakthrough cell-therapy techniques that must first prove to be clinically safe and effective before the company can establish its market value. Are there any examples of companies that went from being privately-owned to public too early? Or have there been any companies that went from being publicly-owned to private? The Sarbanes-Oxley Act of 2002 has been perceived as motivation for a company to privatize itself to avoid the internal controls that the act imposes. These internal controls aim to improve the integrity of a company’s financial info, accountability, and fraud prevention to the point that they took down ENRON in 2001 by uncovering their financial fraud. Should such an act be enforced on public companies, or does it limit the time and resources that a company can instead invest in its medical device development?

References:
“5 Key Differences between a Private and Public Company” by Ronan Steyn (June 2013) Ventureburn
“Sarbanes Oxley Act of 2002” Investopedia