Why Bloomberg LP Has Chosen to Remain a Private Company

The decision by Bloomberg LP to remain a private company over going public has been a strategic choice, influenced by a variety of factors. This article will explore some of the reasons behind this decision and why it aligns well with the company's business model and goals.

The Conflict of Interests

One of the main reasons Bloomberg LP has not chosen to become a public company is a conflict of interests. Bloomberg provides critical financial market data and analytics to investors, enabling them to make informed decisions about buying or selling securities. If Bloomberg were to go public, it would face the challenge of conflicting with its own operations. This is because a public company may be required to provide internal financial data, possibly to competitors. This could compromise the independence and integrity of Bloomberg's data provision, which is crucial to maintaining trust among its users.

Funding and Capital Planning

Bloomberg LP generates significant cash flow from its diverse business activities, such as selling data and terminals to banks, insurance companies, investment houses, corporations, and media outlets. This cash flow is sufficient to support the company's growth and capital needs without the need to go public. The company takes this independent stance to ensure it can best allocate its funds according to its strategic vision. MB (possibly Mark Barkai) believes that going public might impose unnecessary limitations on how capital is spent.

Other Considerations for Going Public

Going public typically involves several key considerations, including the potential benefits and drawbacks. Some of these include:

Raising Capital: This may not be essential for Bloomberg as it already has stable cash flow and can obtain low-cost loans if needed. Allowing Shareholders to Cash Out: Bloomberg is a highly profitable business, making this less of an incentive. Enhancing Reputation: Bloomberg is already a well-known and respected brand in the finance industry, so the incremental benefit of becoming public might not be significant. Reducing Compliance Costs: Public companies must file various reports and disclose financial positions, which can be costly and time-consuming. Bloomberg might prefer to avoid these additional compliance costs. Keeping Financials Secret: Revealing financial data could compromise Bloomberg's competitive edge by allowing competitors to gain deeper insights into its operations. Avoiding Scrutiny: Going public means becoming subject to the scrutiny of the stock market and the public, which could affect the company's reputation management.

Conclusion

The decision to stay private has been a strategic choice for Bloomberg LP, consistent with its long-term goals and the nature of its business. While there are benefits to going public, the potential drawbacks and conflicts of interest have been significant enough to keep the company in its current form. Bloomberg's continued success as a private entity is proof that it has made the right decision for its future.

References

For further reading on Bloomberg's business model and management decisions, you might consider exploring the following resources:

Bloomberg's official press releases and investor relations documentation Financial analysis reports by professional firms Academic research on the benefits and drawbacks of going public