Why do public companies go private?

The long-term aim of many privately-owned businesses is to reach a position where they can float the company and sell shares on the stock exchange, in order to access a greater pool of investors and increase the available funding opportunities, particularly from equity. However not all companies choose to take this route.

In 2018 Elon Musk created headlines in the business press by announcing he was considering taking Tesla private (BBC, 2018). This was followed by a later announcement that Tesla would be remaining a public company. Had Musk followed through with this proposal Tesla would have joined a list of companies which have been taken private by their founders after a period as a listed company. Well-known examples include Virgin, Dell and Caffè Nero.

Why do you think companies whose shares have been traded publicly revert to being private again, given the advantages of being a public company, such as access to funding?

Please include approved 2 academic articles.

Reference:
1. BBC. (25 August 2018) Elon Musk will no longer take Tesla private. BBC. Available from:
https://www.bbc.co.uk/news/business-45306117 [Accessed 20/06/2020].

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