[gruez]

>There is a legal requirement for directors of public companies to act in the financial interests of all shareholders. In practice, and according to precedent, this means long term viability of the company, in other words, a sustained profitable business.

All that means is that controlling shareholders can't use the company as a piggy bank and raid it to fund their other ventures. It doesn't mean the business has to be "sustainable" or whatever. In fact, it's perfectly legal for the board to sell to a "vulture" PE firm that will sell the business off for parts, as long as the sale price is good enough.

[margalabargala]

Yes, that's the major difference between the public and PE companies that OP was highlighting. The owners of a public company can't raid it to fund other ventures. They have to sell it off to someone else to do that.

Selling off a public company like that is generally not trivial and is not surprise sprung on shareholders.

[JumpCrisscross]

> owners of a public company can't raid it to fund other ventures

This is a constant source of litigation in public and private companies alike. A recent prominent case on the public side was National Amusements constantly fucking up the sale of Paramount if it didn't have special goodies for Shari Redstone.

> Selling off a public company like that is generally not trivial and is not surprise sprung on shareholders

Merger law is largely state corporate law. If you have a Delaware C corporation, you're operating under more or less the same merger rules irrespective of how your stock is traded.

What may be misleading some folks is that in a private company, these deliberations are typically covered by NDAs. In public companies, it happens in the open. With private companies, someone needs to get pissed off enough to sue. Herego the understandable availability bias.

To drive home how misleading this purported delineation is, consider that some of the largest private equity managers (e.g. Blackstone and KKR) are themselves publicly traded.

Private equity has tons of issues. Tons. In some industries (e.g. healthcare) it shouldn’t exist. But this tripe about public companies having duties to shareholders which private companies don’t is nonsense.

[raw_anon_1111]

> This is a constant source of litigation in public and private companies alike. A recent prominent case on the public side was National Amusements constantly fucking up the sale of Paramount if it didn't have special goodies for Shari Redstone.

Instead they had to give “goodies” personally to Trump in the form of a $15 million bribe…

[JumpCrisscross]

> Instead they had to give “goodies” personally to Trump in the form of a $15 million bribe

More of an in addition to than instead.

[youarentrightjr]

> All that means is that controlling shareholders can't use the company as a piggy bank and raid it to fund their other ventures

Yes, you're getting it now.

> It doesn't mean the business has to be "sustainable" or whatever. In fact, it's perfectly legal for the board to sell to a "vulture" PE firm that will sell the business off for parts, as long as the sale price is good enough.

As discussed elsewhere in this thread - the sale itself is required to maximally benefit the shareholders.