Public vs. Private — Wall Street Sways Fortunes

The difference can, at times, be drastic. “You can have a company that’s getting rewarded at five times EBITDA in the public market, whether it’s NASDAQ, AMEX or NYSE,” DeWese explains. “In a private transaction, it’s worth seven times EBITDA. If you’re a shareholder in that company, your shares are going to be worth more if you take the company private, and you’re probably going to do that with leverage—a big loan—so then your return on equity becomes substantially greater.”