Private ownership: A way for corporate innovation and growth?

Two recent corporate news items caught my attention: the trend of taking large corporations from public to private ownership.

The first is Chrysler, whose parent Daimler Chrysler is selling a majority stake in to to Cerberus for $7.4 billion. The second is BCE (Bell Canada's parent company) who will be a private company for a $51.7 billion deal.

Publicly held companies are held hostage to shareholders' pressure to maximize profit, minimize expenses, and increase the share price, more often on a quarterly basis. This causes companies to be very myopic in what they do, hiring mercenary CEOs and board who are in it for the short term, almost "hit and run".

This causes all long term plans to be sidelined by the quarterly pressure, or even abandoned altogether. The result is a Dilbertian work environment that is frustrating for employees and customers alike.

Private ownership may be a way to ease this myopia and allow long term investment and planning for products and services. No longer is the motivator the share price this week, or quarterly revenues and profit, or cost cuttings by any means.

Will it happen for Chrysler and Bell, making them reinvent themselves and become market leaders? Only time will tell.

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