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A thing I didn't quite get, under The Advantages to Being Public:

> an ability to command a higher revenue multiple than most private companies can

Can someone explain this?

I think he meant the ability to have higher valuation, which often is cited as a multiple of revenue, EBIDTA, etc. For instance, a publicly traded company will tend to have a higher valuation than a private one b/c it is more liquid and stockholders can cash out on some stock exchange at any time.

You hit the nail on the head. When valuing a privately held company, an investor will almost always apply a discount for lack of marketability because unlike 100 shares of stock in say IBM, for example, an investor doesn't have an easily available market to quickly sell their shares in a private company.

Because of the greater investor/regulator financial and legal scrutiny, better access to cheap capital, and tighter regulation over who can/cannot be a director * , your company has a greater probability of long term survival. This makes it more likely that people will value your company at a greater multiple of annual earnings.

*At least in the UK.

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