Question

What are the disadvantages to being public?

Short answer

When a company trades publicly, its management faces a loss of control and an increase in liabilities.

Step-by-step solution

Trading

In financial terms, trading refers to the process of buying and selling securities. The securities include debt, equity, derivatives, and hybrid securities.

Disadvantages of being public

Following are the disadvantages of being public:

• The management of the company may lose its control.
• The process of public trading is expensive and time-consuming.
• More attention is paid to the dilutionof equity.