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> There is a legal requirement for directors of public companies to act in the financial interests of all shareholders

No, there isn't.

The whole point of Revlon duties is that they trigger "in certain limited circumstances indicating that the 'sale' or 'break-up' of the company is inevitable" [1]. Outside those conditions, "the singular responsibility of the board" is not "to maximize immediate stockholder value by securing the highest price available."

> There is no such requirement for a private company

Are you thinking of minority rights? These vary based on whether a company is closely held or not [2], not whether it's public or private.

[1] https://en.wikipedia.org/wiki/Revlon%2C_Inc._v._MacAndrews_%....

[2] https://millerlawpc.com/rights-minority-shareholders-private...

Why bring up Revlon duties when as you say, their relevance is only during company acquisition or restructuring?

It's well established over hundreds of years of case law that directors of public companies have to act in good faith to benefit the company (and therefore, the shareholders).

Weird cherry pick.

> Why bring up Revlon duties when as you say, their relevance is only during company acquisition or restructuring?

It’s an exception that proves the rule. In that specific case, what you’re saying applies. In all others, it does not.

> It's well established over hundreds of years of case law

Where are you getting this from?

> directors of public companies have to act in good faith to benefit the company (and therefore, the shareholders)

Where did you get that this only applies to public companies? What you’re describing is basic English and Delaware corporate law.

Also, there is a massive difference between “all shareholders” and “the shareholders”. And nothing about public companies says they can’t be structured in a way that sometimes undermines some shareholders. This comes up most commonly when different shares have different voting or blocking rights. But it’s also fundamental to the intent behind B Corps, publicly traded or not.

> Where are you getting this from?

I seriously doubt you're operating sincerely in this thread, given your ability to cite Revlon. But on the off chance, start here:

https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.

> And nothing about public companies says they can’t be structured in a way that sometimes undermines some shareholders.

See above.

> seriously doubt you're operating sincerely in this thread, given your ability to cite Revlon

I know about the topic and can correctly cite sources, herego I'm operating insincerely?

> start here [1]

You're citing a 1919 Michigan state court decision concerning the Ford Motor Company. Ford went public in 1956 [2]. The sole source you've cited is about a then-private company from over 100 years ago.

You said "there is a legal requirement for directors of public companies to act in the financial interests of all shareholders." That is wrong. It's doubly wrong in the context of public versus private companies, given it applies to all business corporations.

[1] https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.

[2] https://www.fool.com/investing/2019/01/16/63-years-later-wha...

You're operating insincerely by attacking low quality interpretations of what I'm saying, among other problems. For example:

> You said "there is a legal requirement for directors of public companies to act in the financial interests of all shareholders." That is wrong. It's doubly wrong in the context of public versus private companies, given it applies to all business corporations.

Wouldn't that mean my statement is incomplete, not "doubly wrong", if it applies to all businesses, not just public ones?

Similarly, cherry picking sources that support narrow scenarios tangential to the discussion (Revlon) is not sincere.

By this point it's clear your religious grasp on the distinction between public and private companies will not be shaken. I'll continue living in reality, where in fact directors of private companies do act against the interests of the company itself (and in practice are still in accordance with the law), paying themselves off and leaving an insolvent heap. I'm honestly shocked regarding your insistence that public and private companies are the same in this matter; I can only assume that you already have, or stand to, gain from such a private endeavor, and this is causing a cognitive dissonance that is at fault for the vomit you've spewed above. Good day.

>There is a legal requirement for directors of public companies to act in the financial interests of all shareholders. In practice, and according to precedent, this means long term viability of the company, in other words, a sustained profitable business.

All that means is that controlling shareholders can't use the company as a piggy bank and raid it to fund their other ventures. It doesn't mean the business has to be "sustainable" or whatever. In fact, it's perfectly legal for the board to sell to a "vulture" PE firm that will sell the business off for parts, as long as the sale price is good enough.

Yes, that's the major difference between the public and PE companies that OP was highlighting. The owners of a public company can't raid it to fund other ventures. They have to sell it off to someone else to do that.

Selling off a public company like that is generally not trivial and is not surprise sprung on shareholders.

> owners of a public company can't raid it to fund other ventures

This is a constant source of litigation in public and private companies alike. A recent prominent case on the public side was National Amusements constantly fucking up the sale of Paramount if it didn't have special goodies for Shari Redstone.

> Selling off a public company like that is generally not trivial and is not surprise sprung on shareholders

Merger law is largely state corporate law. If you have a Delaware C corporation, you're operating under more or less the same merger rules irrespective of how your stock is traded.

What may be misleading some folks is that in a private company, these deliberations are typically covered by NDAs. In public companies, it happens in the open. With private companies, someone needs to get pissed off enough to sue. Herego the understandable availability bias.

To drive home how misleading this purported delineation is, consider that some of the largest private equity managers (e.g. Blackstone and KKR) are themselves publicly traded.

Private equity has tons of issues. Tons. In some industries (e.g. healthcare) it shouldn’t exist. But this tripe about public companies having duties to shareholders which private companies don’t is nonsense.

> This is a constant source of litigation in public and private companies alike. A recent prominent case on the public side was National Amusements constantly fucking up the sale of Paramount if it didn't have special goodies for Shari Redstone.

Instead they had to give “goodies” personally to Trump in the form of a $15 million bribe…

> Instead they had to give “goodies” personally to Trump in the form of a $15 million bribe

More of an in addition to than instead.

> All that means is that controlling shareholders can't use the company as a piggy bank and raid it to fund their other ventures

Yes, you're getting it now.

> It doesn't mean the business has to be "sustainable" or whatever. In fact, it's perfectly legal for the board to sell to a "vulture" PE firm that will sell the business off for parts, as long as the sale price is good enough.

As discussed elsewhere in this thread - the sale itself is required to maximally benefit the shareholders.

Public companies are interested in quarterly profits. But for the most part still have longer term goals and don’t purposefully make decisions that will make the company worse off in the long term.

Apple is not going to sell off all of its real estate into separate company, force the other half to rent it and then sell off the rental holdings. Even when it was almost bankrupt it didn’t “shut down the company and give the money back to shareholders”.

The former is a standard PE play. I’ve been part of the “roll up small companies and enshittify them and go public” playbook. I was the lead architect at the parent company designing the software system that integrated the disparate systems of the target companies.

Funny enough I worked for a startup that I loved in 2018-2020 and only left because a job at BigTech fell into my lap. After leaving BigTech in 2023, the company that acquired the startup I worked for (a PE backed acquire and enshittify company) offered me a job as the architect to consolidate their systems based on a referral. I booed out after having a lot of discussions with their internal management and one with a representative from their investor.

It’s hell being under the thumb of a PE companies management (not the internal management) they second guess everything and the level they were hiring me for, I would have dealt with the PE investors representatives directly

> I see these private equity takes on HN frequently and am really baffled by the ignorance.

Probably a good time to note that you’re posting this comment on a website created by a private equity firm for promotional purposes.

Zing! Gotem! Reddit moment xD

quite the opposite actually, your comment adds nothing to the discussion

If someone is baffled that the tone of a private equity company’s message board is pro private equity then I think it’s an excellent reminder.

I think it’s useful to point out that Silcon Valley is a rapaciously predatory and financialized business climate precisely because because they spend so much time and money on PR to convince everyone otherwise.