Why might a closely held corporation choose to remain private and why might it choose to be public traded?

Answer 1

1) Because private corporations only have a few shareholders, some businesses may prefer to remain as a private corporation so as to limit the control of the company to a few key players. Not only is the power of the corporation concentrated among a few, but so, presumably, would the profits. Most corporations in Canada do remain private and given the reasons above it makes sense to do so, but there are also valid reasons to "go public". Public corporations offer stock shares for the general investing public to purchase, which is a good way to raise funds if a corporation needs additional financial resources for one reason or another. Consider also that the liability of investors or shareholders is limited to their personal investment in the corporation. Public corporations have many shareholders and so the personal investment and thus liability, percentage wise, is going to be less for public corporation investors than for private corporation investors. It would possibly also be easier to borrow money from outside sources as a public corporation versus a private. Banks may see multiple investors as a sign that the corporation is successful and more capable of paying back the money being loaned. Customers might also appreciate the fact that a corporation is public and that the purchases they make will be profited upon by many people, even themselves if they have purchased stocks.