Public vs. Private Capital

Many executives may dismiss private equity as simply expensive money while public equity is considered relatively cheap. The logic seems obvious enough: private-equity returns have been higher than public-equity returns so, the former must be costlier. The reality is more complex. One gets what one pays for: public equity is not as cheap as it may seem and private equity is not as costly. Only by appreciating the costs and benefits of each, can an executive make sound, value-maximizing decisions. When public markets are as vibrant as they are today, it is easy to overlook private equity as an alternative. The public markets may be directly accessible for some, and the publicly traded companies are very willing to commit capital in creative partnerships. Maintaining private-equity relationships today may be the key to securing the financial flexibility and the resources necessary to capitalize on opportunities tomorrow and secure long-term success.