Should First Rangeway Remain Public?
First Rangeway should go private despite its initial rise and success as a publicly traded company. While the company did initially benefit from its IPO, the case suggests the company is experiencing more challenges than they are advantages. With its struggles in employee burnout and shareholder concerns, withdrawing from the stock market and having more control over capital seems to be a positive solution that addresses the company’s current problems. Overall, going private seems to be the better option for the company's long-term success.
One issue for First Rangeway is the additional costs and complexity associated with being a publicly traded company. First Rangeway must comply with regulations such as Sarbanes-Oxley and other SEC reporting requirements. To meet these requirements, the company needs additional accounting, legal, and administrative resources. These resources are estimated to cost over one million dollars annually. Since the business is a consulting firm, most of its value comes from its employees and intellectual capital rather than physical assets. Because of this, the additional expenses of being publicly traded do not directly improve the firm’s competitiveness. Instead, they divert valuable time, and financial resources away from core business activities and long-term growth.
Another issue that arises from First Rangeway being public is the pressure that gets imposed on employees. Since First Rangeway is currently a public company, there is a lot of short term pressure placed on them to make profits and increase the value of their stock. As a result, employees tend to get overworked, putting in more hours and effort to meet that quota. Overworking employees to barely meet a quota is an incredibly risky endeavor that can lead to significant loss of employees. By making themselves a private company, they remove the pressure put on employees to meet a quota, instead focusing on just making profits, helping increase employee security and satisfaction.
Another issue with remaining public is that First Rangeway does not necessarily need all of the money gained from being a public company. As a consulting company, Free Rangeway does not need extra cash to spend on things, as the vast majority of their work is being done by their own internal employees without the need for extra spending.
Even though it will take significant work to switch from a public company to a private company, First Rangeway should transition to a private company as the benefits of becoming one outweigh the benefits of remaining a public company. First Ridgeway remaining public leads to extra costs and regulations, employee dissatisfaction, and unnecessary benefits. If they go private, most of these issues get resolved and can lead to an overall better experience for the employees at First Ridgeway.