Whether you are considering investing in a company or starting your own business, understanding the main differences between public and private companies is crucial. These two main types of companies have significant differences that can greatly impact your business decisions. In this article, we will dive deep into the key characteristics and elements of public and private companies, as well as the benefits and drawbacks of each type.
In United States business law, public companies, also known as publicly held companies, are businesses that are traded on the stock exchange. In other words, shares of public companies can be bought and sold by investors on the stock market. The stock is typically sold in order to raise capital for the company.
Private companies are often owned by the company’s founders, management or private investors. By definition, private companies are not involved in public capital markets. Instead, they rely entirely on private investments and funding.
Contrary to popular belief, private companies are not always small and insignificant. In fact, some of the largest companies in America are private, including Mars, Cargill and Koch Industries.
Now that you have a basic understanding of private and public companies, let's take a closer look at their key differences.
In the business world, “going public” refers to a private company becoming publicly traded and owned. Specifically, it means that a private business is issuing an initial public offering (IPO), which is the process of offering shares of a private corporation to the public for the first time. In most cases, a company may choose to go public in order to increase prestige, expand ownership and raise capital. IPOs are also used as an exit strategy for venture capitalists to get out of their investment in a company.
An important factor to keep in mind is the legal requirements and obstacles involved in converting a private company to a public company. Consulting with an experienced business attorney is strongly recommended before considering this major decision.
Although “going public” may be more commonly known, “going private” is another term that is often considered in business law. This occurs when a company buys back the outstanding shares of the company from public shareholders by means of a leveraged buyout (LBO) or management buyout (MBO). Once the company goes private, shareholders no longer have the ability to trade their stock on the market. A company may choose to go private for a variety of reasons, including increased flexibility, reduced costs and confidentiality. Going private can also have the benefit of being free from the regulations that public companies have to abide by, such as the Sarbanes Oxley Act of 2002.
It should be noted that it is not always ideal or possible for a company to transition from public to private. Speak with a licensed attorney before making any decisions in the matter.
In conclusion, understanding the key differences between public and private companies will play a key role in helping you navigate the business world. Please do not hesitate to contact one of our seasoned business attorneys if you have any further questions regarding private and public companies.
Are you ready to take your business to the next level, but you’re still in need of financial assistance? You may want to consider applying for a business loan. Although the process can seem daunting, with the right information and proper legal support, you’ll soon be on the way to starting your own business. Here is a brief guide that will help you navigate the process of applying for a business loan in the United States.
When looking for a business loan, deciding which bank to choose can be challenging, as there are many different options available. Nonetheless, it is important to keep in mind that the best place to apply for a business loan will typically be wherever you qualify for the lowest interest rate. Making a properly informed decision requires examining interest rates at multiple institutions. You should also examine other vital factors, such as the exact type of funding you are looking for, how soon you need the loan and how strong your business’s finances are.
The term “business loan” covers a number of different types of financing. To make sure your business's needs are best met, it is important to be familiar with the main types of loans available. These options include:
With so many options available, it can be challenging to pick the type of loan that best fits your needs. Consulting with a specialized business attorney may assist you in determining the optimal choice for your business.
Determining your eligibility is a crucial step in deciding where you should apply for a business loan. Business loan requirements vary depending on the institution. However, the main factors that lenders may consider when reviewing your application include your credit score, collateral or personal guarantee, annual revenue and the age of your business. For instance, traditional banks generally require that your business has been active for at least two years. Additionally, some lenders may force you to pledge collateral that can be seized if you default on your loan.
Having decided which lender to work with, it is time to begin preparing your application. This process usually begins by gathering important documents such as your personal and business tax returns, articles of incorporation and association, financial statements, profit and loss statements and personal and business bank statements. If you are unsure regarding which specific documents you may need to submit, consult with a professional business attorney.
Filling out a business loan application may take some time. However, as long as you’ve gathered the proper documentation in Step 4, this task will be a bit less tedious. During this stage in the process, you will be asked to fill out forms either online on a computer or in person with pen and paper. Although the exact contents of the application vary depending on the lender and type of loan, the document typically includes questions about your business, financial details and the amount of money you are looking to loan.
Depending on the type of loan you chose, you can expect to wait anywhere between a few hours to several weeks to hear back from the lender. In some cases, the institution may run an initial examination before asking for additional documentation. If the lender asks you to provide more information, make sure that you respond quickly to avoid further delays in your application approval process.
Once your loan has been approved, the lender will send a loan agreement, usually via email. At this point, the only task remaining is to sign the loan agreement. You will then begin to receive funds based on the arrangement stipulated in your agreement with the lender. Accordingly, you will also start to make loan payments as per your repayment plan.
Applying for a business loan can seem intimidating at first, but with the right preparation and guidance, the process can run smoothly and quickly. By investing the effort to apply for a business loan in the right way, you are increasing the probability of getting approved and obtaining the necessary funds to expand your business.
If you are looking for legal support in applying for a business loan, or if you have any other questions about starting your own business, contact one of our expert business lawyers today at Attorney At Law. One of our skilled attorneys would be delighted to provide assistance as you navigate this journey.
Are you unsure whether you need a business lawyer or corporate lawyer to address the legal issues facing your company? There has been plenty of confusion regarding the difference between business and corporate law. In this article, we’ll review the main differences between these two legal sectors and explore how they impact your business.
Business law can be considered an umbrella term that covers a variety of different legal elements relating to establishing and operating a business. Business entities of all forms, such as limited liability partnerships (LLPs) and joint ventures (JVs), deal with aspects of business law. Generally, business lawyers have a vast knowledge base that includes employment law, contract law, tax law, and intellectual property law. Let's examine these areas of law in more detail and explore how they relate to the broader field of business law.
Corporate law, on the other hand, specifically focuses on the legal issues surrounding corporations. In its essence, corporate law may be considered a subset of business law. It mainly deals with the operations of a corporation including the duties of its directors and officers, shareholder rights and other important subjects. Let’s delve deeper into some of the fundamental components of corporate law, such as:
Are you still unsure if you require the services of a corporate or business lawyer? Understanding the specific areas of expertise of each type of attorney can assist you in making an informed decision.
Business lawyers, in the simplest sense, are concerned with how the law impacts businesses in certain circumstances and activities. They provide assistance on a wide range of legal issues related to the day-to-day operations of a company, such as contracts, employment law and intellectual property. Moreover, business lawyers may provide assistance in IRS and tax compliance. Here are a few other instances in which you might want to go to a business lawyer:
Alternatively, corporate lawyers have a slightly different area of practice. In general, corporate lawyers might provide legal support regarding the responsibilities and legal rights of corporations. The following are examples that typically require the expertise of a corporate lawyer:
While it is not uncommon to get confused between corporate lawyers and business lawyers, there are a few major differences between these two fields of law. Nonetheless, it’s also important to note that many lawyers are able to handle both corporate and business matters. Ultimately, when it comes to choosing proper legal representation, it depends on the exact needs of your business and the expertise of the lawyer.
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