Does going Public make the CEO lose his "full control" over the company?


I could not understand why does a company (hint: Facebook) not want to go public.

I can understand that it is important for a CEO to have full control of a company, but if the company hands off 49% of itself to the public, with the CEO taking 51%, wouldn't the final decision still be of the CEO? Or am I misunderstanding something here?

Entrepreneurs Company Large Companies

asked Sep 22 '11 at 13:45
317 points
Get up to $750K in working capital to finance your business: Clarify Capital Business Loans

4 Answers



When you only have 49% you are in danger of loosing your job, but even a shareholder with 1 share can sue you if you violate his rights. The moment you sell one single share you are not any longer in FULL control.

Try taking out all profits without paying the one share holder his part and you end up in court.

That said, it is about cashing out. A company has no value unless you sell it. Companies may need money and hey, founders may also want some ;)

answered Sep 22 '11 at 14:00
Net Tecture
11 points
  • I know this concern is true of my company. We made the decision to never go public (and go as far as actually put that in the operating agreement). Not only does it put control of the company in jeopardy, but also creates a conflict of interest...please the shareholders to the detriment of the customers, or please the customers to the detriment of the shareholders. – Jason Mc92 12 years ago


There are minority-shareholder issues which should not be underestimated. However, there are plenty of other issues as well.

Let's imagine you have a board of directors with 3 members. Our pretend company is still privately held and all the board members are shareholders and all shareholders are represented on the board. Let's even make it more interesting saying that the percentages of ownership are as follows:

Board Member A: 51%
Board Member B: 30%
Board Member C: 19%

At this point, Board Member A is certain to win any vote since he can cast all of his votes and override anyone else. If the company goes public, that is, the company sells shares, this could (depending on the structure of things) dilute Board Member A to the point he has less than 51%. At this point, the votes could go any way.

Another thing to consider is that bringing in new owners (e.g., by a public sale of stock) allows those new owners a voice - and a vote - in the operations. A may feel comfortable with B and C but D (a new member) can also attempt to influence B and C. If D is successful, A could find himself in trouble.

answered Sep 22 '11 at 14:18
1,194 points
  • this is the point i don't get. I mean as long as A (CEO) make sure his shares do not get diluted below 51%, it doesn't really matter what B, C, D.. Z decides, he can still decide everything by himself right? – Pacerier 12 years ago


You can't necessarily keep 51%. For example, in the UK a company has to have at least 75% of its stock in public circulation in order to float on the London Stock Exchange.

answered Sep 22 '11 at 15:04
Mike Scott
691 points
  • I mean even if he isn't in the London Stock Exchange, he would still be listed in the other exchanges while keeping at least 51% to himself right? – Pacerier 12 years ago


It's not just about control, either. Facebook in particular has a habit of making changes to their service that really annoy a whole lot of people. When they first brought out newsfeed, millions of people protested, and their HQ got mobbed for a couple days. Of course, those were still only a fraction of the total amount of users they had, but you can imagine what a rollercoaster that would have been for the company's stock if they'd been public at the time.

Zuckerberg has as much as said that they're planning to announce a few more changes this year that they expect people to protest, and he doesn't want to have to worry about their stock while they do.

answered Sep 22 '11 at 19:18
282 points
  • i don't get it, why worry about the stock then if he doesn't want to worry about it, just let it drop and rise and drop and rise no ? – Pacerier 12 years ago
  • Because it makes the company look bad, leads to bad press and is a distraction for the employees who own stock. Once a company's public, the pressure is on the CEO to keep the stock up, and failure to do so will make them look bad and erode their influence. – Cass 12 years ago
  • ic, so the benefit of being private is that no one actually knows how poor/rich they are and no one will even know if they are in a deep soup or not? – Pacerier 12 years ago

Your Answer

  • Bold
  • Italic
  • • Bullets
  • 1. Numbers
  • Quote
Not the answer you're looking for? Ask your own question or browse other questions in these topics:

Entrepreneurs Company Large Companies