Privatization is the transfer of public or government property, business or operations to a private company. The stock of the public company is no longer traded in the stock market and the general public is asked to give up their stocks in that company. The company also changes its trading name from ‘public limited’ to “private limited”.
Privation is done for a good cause. It helps the government to save money by unloading the extra burden and let the private firm to generate profit from the public property or business.
Example of Privatization:
Dell Inc, in 2013, transitioned from publicly held company to privately held company with the permission of its shareholders. Dell buys back the shares from its shareholders at a fixed amount plus offered specific dividend. In this way, Dell removes itself from the NASDAQ Stock Exchange and stop public trading of its shares.
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