Good Sign or Bad: Company is changing from Public to Private?

Question

Company is known for being top heavy (too many Directors, AVPs).
If you are in one of those management positions, do you actively pursue other non-management opportunities in the company (at same salary level), or do you wait to see if you will be selected to stay with the new Private company structure? If a severance package is offered before you find out if you will selected to keep your job, do you take it?

Answer 1

Small unprofitable companies generally shouldn't be public - the costs of being public (Sarbanes alone) rarely make the move worthwhile, especially since few stock analysts will cover anything of this size. This makes this purely an arbitrage play like Digital Music Group, gambling that the company can raise money at a higher valuation in the public markets than private. Even if correct in the short term for the company, it's rarely a good move for the general public investor since the risk profile is way too high - the company may do fine, but it should be private until it shows greater results.

Firms are still mainly interested in making money, they note disapprovingly, whatever the CEO may say in the annual report. When commercial interests and broader social welfare collide, profit comes first. Judge firms and their corporate social responsibility efforts by what the company does, i.e. charities, not by what they say—and prepare to be unimpressed. By all means, judge companies by their actions.

You need to find a lawyer in your area or a firm that represents clients in employment and labor law to discuss your options, including experience representing both public and private companies in their employment relations, including advising clients on executive compensation arrangements, non-competition and non-disclosure agreements, severance agreements, stock plans, phantom stock arrangements, and other incentive compensation arrangements. Your attorney should also provide general crisis-management and trouble-shooting on a broad range of issues involving employee oversight and supervision, and personnel relations; advise on the development of employee manuals, and assist you in monitoring compliance with various federal and state employment laws, such as the Fair Labor Standards Act, Wage and Hour Act, Family Medical Leave Act and the myriad anti-discrimination laws. Your attorney should assist you in implementing a health and retirement plans and have experience providing advice on a broad range of employee benefits issues, including the development and administration of qualified retirement, deferred compensation, Cafeteria, and disability plans.

Your situation may include a wide range of employment and discrimination disputes involving a claim of wrongful termination, minority stockholder rights, and discrimination based upon race, gender, age or requesting EEOC investigations of alleged class actions. Your attorney could conduct corporate compliance reviews (including under the wage and hour laws) and provide training on discrimination, sexual harassment and diversity issues.

Answer 2

My own personal experience tells me that you are in the best position to answer your own question. If you are part of the "corporate elite" you will indeed survive and prosper. If you are not in the known group of select management then get ccoking and start looking. Be wary of in-house moves to a non-management position. You have a resume to be true to. f you like management, and I bet you do, get out your networking tools and find a new company that will stay public instead of making certain AVPs, EVPs, etc very wealthy and leaving you and others in the cold

Answer 3

It depends on the amendment of the internal structure of the company itself. Most probably within a private company, they will tend to cut down on all irrelevant costs.