A public company has stocks that are traded publicly, so there are many people that own a stake in the company. Their financial statements are reported quarterly. Additionally, they are held to the legal standards of laws like Sarbanes-Oxley. An example of a very successful public company is Amazon with a revenue of $136 billion. Private companies have the ability to share profits with their employees in a way that is not possible for public companies. They do not publish their financial statements to the public and do not have to comply to Sarbanes-Oxley. A successful private company is Dell, with a Forbes estimate of $59 billion.
There are major differences as to whether a company is public or private. When a company is public, it has numerous shareholders involved, and trades stock publicly. In addition, a public company has to maintain their financial information. As a result, there has to be reports done on the financials quarterly, and this creates a need for an accounting department. With a private company, there is a limited amount of owners for the company. However, a private company is not accountable to report financial information. With private companies, profits are more likely to be shared with employees, while in public companies; employees are at most give rewards. An example of a successful private company is Ernst & Young. An example of a successful public company is JPMorgan Chase.
As many have stated, the main difference between a private and public companies, is that public companies have stocks that are traded publicly and there are many stakeholders in the company. Another difference is that in private companies, the shareholders are usually involved in the management of the company. Private companies are generally invested into with the longer-term in mind. For example VCs will enter with a three to five-year plan before exiting. This means management can work toward a five-year plan, theoretically with more reward, and less immediate pressure. Whereas with a public company public is trying to meet short-term goals. Also public companies have detailed financials which are readily available for potential investors to see vs a public company that may have less-detailed information which could make it harder for potential investors to evaluate. An example of a successful private company is Medline with $9.2 B in revenue. A successful public company is Amgen with $23B in revenue.
A public company trades in the stock market publicly while the private one does not. A pro about private companies is that do not have to disclose corporate financial information while public companies have to.
Because for the private companies do not have to disclose financial information they do not have many shareholders unlike public which have many investors. Apple, Bank of America, Chase are public companies while Dell, Ikea, and Medline are private.
Public companies have shares that can be publicly traded in the stock market. Private companies do not have stock that can be publicly traded. One of the advantages of a private company is that Private companies are not required to file their annual financial statements with the Registrar of Companies, and so their annual financial statements are not available to the public. The main reason to go public is to raise funds in a cost-efficient way to finance operating or growth objectives. If a private company goes public, it accesses an additional source of funds to the cash available from operations and borrowings. At the same time funding is diversified and extended to a much wider investor base. Public companies tend to be more visible than private companies and going public will often increase the public’s awareness of a company. A listing on stock exchanges and accompanying disclosures and media coverage can heighten the awareness of a company’s products and services among the business and financial community as well as consumers. Some disadvantages of public companies are loss of privacy and loss of control. Ernt & Young is a private company with a $29.6 billion dollar revenue. The company is owned by 6000 partners worldwide. Apple and Microsoft are is a publicly traded company.
Public companies sold all or a portion of itself to the public. It's Issues publicly traded stock and there is no limits to numbers of shareholder it could has. While, private companies are own by a small numbers of shareholders/ individuals and could does not traded publicly.
Pros for Public
1. Are required to disclose their financial information to the public since they trade stock on a stock exchange.
2. Company can selling stock (equity) to raise capital for business expansion and research projects
Cons for Public
1. Company's management have to answer to stakeholder on business state, from financial to projects.
2. Responsible for Sarbanes-Oxley or the PCAOB
Pros for Private
1. Management doesn't have to answer to stockholders or required to disclose their financial information to the public.
Cons For Private
1. Because of flexibility, there is less focused on increasing the value of the company because few shareholders exist.
Private companies: Bloomberg( News media. Delivers business and markets news, data, analysis), Koch Industries( Involves in manufacturing, petroleum, financial etc)
Public Companies: Stryker ( leading medical technology companies, offering innovative products and services in Orthopaedics, Medical instrumentation etc), Siemens Healthineer ( medical technology company with focus on Laboratory Diagnostics, Molecular Diagnostics, Molecular Imaging, Magnetic Resonance Imaging, Point-of-Care Diagnostics and more )
Privately owned companies are privately held. This means that the company is owned by small group of people, or private investor. On the other hand, in public company, there are shareholders that claim to be a part of the company’s assets. One of the biggest difference between public company and private company is that public company is required to file quarterly earnings reports with Securities and Exchange Commission (SEC). However, private companies are not required to disclose any financial information. An advantage of public company is that, it uses the stocks to invest in new projects within the company for growth. In contrast, private companies rely mostly on the profit. An example of successful public company is Amazon and successful private company is Dell Inc. (Computer company).
Public companies has shares which can be traded publicly on a stock market. Private company becomes a public company when it offers the shares of the company to public. Public companies are run by a board of directors. This is because the firm will be compelled to increase shareholder value. Shares that increase in value are more desirable for investors, who are then less likely to sell the shares. Private companies have a group of investors.They usually have few shareholders. The business decisions here are made by either the business owners or investors rather than managers. Private companies mainly rely on proft and they will not share their financial information. Public companies uses stocks to invest in their new project for the company growth. Stryker, Molecular Imaging are examples for public company. Ikea is an example for private company.
Public companies has employees that increase the shareholder value which remains long trem. Private company becomes public when it shares its stocks in front of public. Private companies tend to see profit unlike public companies which invest their profit shares in the company for better business. Private companies has very few shareholders and hence owners makes decisions for benefit of the company. They dont share their financial information unlike puclic companies. Facebook is example of private and apple is example of public company.
A private company needs at least two or more person for its formation and has less legal restrictions and whereas public companies sold all or part of it to public and needs seven and more person for set up and more legal restrictions. The public company has no limit of number of members and also no restriction on transferability of shares and public companies like to report high profit to impress shareholders whereas private has a fixed number of members and restrict transfer of share to public and they cannot sell more stock to raise money. Main advantage of public companies are they can raise their capital by selling more stocks or bonds. The management of private companies are their biggest advantage as they do not need to answer stockholder. The private company can start their business after receiving a certificate of incorporation whereas public companies needs a certificate of commencement of business before it gets incorporated.
Albertsons companies are privately owned and second largest supermarket chain in north America with annual revenue over $500 million .JP Morgan chase is a leading global financial and largest banking institute in united states.
Private companies are only owned by a few individuals and cannot be traded publically. They are not required to report to the security exchange commissions or even report their financial data. By not reporting the financial data, they save more money not having the hire people to make sure to do these reports. For public companies, there are a bunch of shareholders and they can publically trade the stocks. These companies are required to report to the security exchange commissions and needs to report the financial data quarterly. This means these companies need to hire an accounting staff to deal with the financial reports for each quarter. This type of company can give the employees benefits like bonuses and stock options while for private companies, they get profit sharing and stock appreciation rights. The advantages of a public company is that they can get into the market and sell more shares but private companies do not need to answer to any stockholders. Both of these types of companies can also be big companies. Private companies are not always small companies. Public companies get their funds by selling its shares and bonds while private companies get private investors or capitalists. Examples of a public companies are Bank of America, Walmart, Proctor & Gamble, Johnson & Johnson, and Siemens. Proctor & Gamble have a profit of $7.79 billion and have a market value of $197.12 billion. Examples of private companies are Deloitte, Toys ‘R’ Us, Wawa, Uber, and Panda Express. Deloitte has about 244,400 employees and $36.8 billion revenue while Uber has about 12,000 employees and $6.5 billion revenue.
The difference between private and public companies is that private companies do not trade their shares and stocks to the public, so they can maintain all of their finances internally without having to submit financial reporting for their investors to look at. They also do not have to deal with Securities and Exchange Commission, which means less work for them in terms of reporting. An advantage of Private companies is that since they do not have to pay out investors they can decide how much of that money they can keep and how much they can give away to employees in terms of profits. However, Private companies can not rely on outside investors for financial support and must come up with the money to work and start up internally. Public companies have to issue their stocks for trade to the public, which requires more work in terms of filling financial reports and reporting to the SEC. Public companies are able to gain more money from outside investors to work with, which can give them more room to grow and expand, but more stress of keeping more investors happy. An example of a private company is DELL, which is a massive technology company that pulls in billions of dollars of revenue a year, and have been expanding and releasing new products every year as they keep up with the changing world. A publicly traded company would be EXXON Mobile, which provides oil to the United States, owning gas stations all over the country, and owning oil rigs across the world, netting a total revenue in the billions.
The private companies are owned by the founder of the company or a group of private investors. The profit is shared with the employees by profit sharing or stock appreciation rights. Pros of private companies is that the company must who the investors are. There is no requirement of the disclosures. Cons of Private companies are they must find the private investors to raise the capital. It is more expensive to raise the capital. Examples of private companies are forever21, dell which are running successfully.
A public company is a company that has sold some portion or all the portion to the public through Initial public offerings which means that the shareholders have the claim to be the part of the company’s assets and profits. In public companies there are many shareholders, there is reporting of the financial data quarterly. The pros of public company is that there is accessibility to public market for the fund raising. It is less expensive to raise the capital. Cons of public companies includes compulsory disclosure of the financial results. Examples of public companies are Facebook, twitter, ford which are running successfully.
The major difference between public and private companies is simply who they are beholden to. Public companies are controlled by the public who own the stock. Those who buy more stock have more say but at the end of the day it is the owners of the stock that can control the business and it is to them that the upper management reports. Private companies are controlled by those they decide to put in control. This allows for greater flexibility because shareholder's profit is not the number one driving force.
In terms of profitability I do not believe that a company being public or private has any major effect on the profitability of that company. The fact of the matter is that being private or public depends entirely on how one wants to run the business and what one wants to get out of it. If you just want to get rich as fast as possible then public is they way to go. Grow to a decent size, go public, then get rich when your share price skyrockets and you can dump your stocks. But if you're interested in staying in control this is not going to work. If you want control and long term gains then private is the way to go. You will still have control, but you will in general make less money as a person because your income will be based on what the company makes alone, not including stock price.
Based on the following grounds the public and private company differ that is, a company that is listed on a recognized stock exchange and traded publicly, and a private company is not listed but handled privately by the members. So now talking about the advantages of both:
In public company cash infusion, there is an immediate cash infusion in a company for a specific purpose. It ha access to public market for funds but sometimes cheap for raising capital. But some disadvantages are: We don't know which public investor own their stock and financial results are never disclosed.
In private company advantages are that everyone has a say who the investors are and no requirements for disclosure. But disadvantages are have to search for a an investor to raise a capital and that goes more costly.
So public might have positive side only if advantages are balanced to its disadvantages, as public drastically changes the operation that can affect on going projects and business.
