One of the biggest differences between private and public companies is that while private companies are owned by only a few individuals are do not have stocks that are traded publicly, public companies can have many millions of shareholders. Additionally, private companies are not required to report financial data on a regular basis, while public companies are, due to the shareholders being entitled to that information. This seems like a major pro for being a private business, however, with a deeper look it shows that not having stocks publicly traded takes away the ability to give employee incentives through stock options. Any company you can own stock in is a public company such as bigger companies like Microsoft and Apple.
Public companies are owned by stockholders that participate in a stock exchange where anyone can pitch in, while private companies are owned by stockholders that may sell, buy, or trade stock with anyone of their choice. Private companies have more control over who can become a shareholder. However, while public companies are under much more scrutiny, they are generally more popular and receive more marketing opportunities. Simply being on the public market gives the company instant marketing via the stock exchange and word of mouth from the finance community.
While a public company can sell stocks to anyone on the stock exchange, private company stocks are owned by a few individuals and cannot be traded publicly. A public company reaps the benefits of the public stock exchange, but it also has more restrictions. It must file disclosure statements to the SEC (which will protect investors), report financial data in quarterly reports, and hire an accounting staff. A private company may have more trouble with funding without the ability to sell stocks publicly, but it is not required to follow as many guidelines and will find it easier to pinpoint all the shareholders involved. Private companies won't be pressured to instantly appease as many shareholders as public companies. This, coupled with more flexibility and freedom from the SEC, will allow them to work on long-term growth instead of just focusing on achieving short-term goals. A lot of big banks like J.P. Morgan Chase and Wells Fargo are some examples of public companies. Some well-known private companies are Mars, Cargill, and Koch Industries.
The difference between a private and public company is that a private company is owned by a few individuals themselves which can be the company's founders or even a clan of private investors. These investors or founders own all of the company's equity, assets, and profits which is shared with no one else. A public company is a company which is owned by several people who have bought a certain amount of equity of the company and its stocks. A public company is free to sell as much of itself to the public as well as it pleases.
The advantages of a public company is that they are susceptible to more opportunity to grow since they have the ability to reach out to the market by selling equity to raise its own capital for the sole purpose of expansion. I believe the main cons to a public company is that there will be a significant delay in major decision-making and also a lack of secrecy. There will be a delay in decision-making because each and every decision has to be made from input from the bottom of the company. So the feedback will be given from the bottom of the company, reach its way to the top, and then the decision has to be made which has to make its way back down to the company to take effect. This decision-making process will take a considerable amount of time. An example of a public company is Apple Inc. who's stocks are open to the stock market which are available to the public to buy and sell.
What is the difference between public and private companies? Based on their differences, what are some pros and cons of each? Give an example of a private and public company, and state the successes.
The main difference between a public and private company is that a public company can sell shares of its company to the general public on the stock market, whereas a private company sells their shares to select investors. Trading on the stock market and having your stock open to the general public is beneficial for public companies because it acts as a source of revenue and it's relatively stable because millions of people are invested in your company. However, there are a number of rules and regulations that need to be followed when trading on the stock exchange, and the company also needs to disclose financial information to the stock holders. On the other hand, private companies don't have to follow these regulations, and they only need to report their financial information to the select investors. One downside to this is that it can be slightly less stable if investors are unhappy with the state of the company and want to pull out of their deal. Stryker is a public medical device company traded on the NY Stock Exchange under "SYK", and Cardio Focus is a private medical device company.
Difference between public and private company is that public companies sell their stocks publicly and anyone can buy and private companies are not traded publicly. However companies can switch between public and private if they want to. Pros of having private company is that you do not have to report your financial data and cons are that they are not funded by public. Pros of public company is that people are aware of you and cons are that you have to report your financial data every four months therefore requiring accounting staff. Microsoft, stryker, and tesla are examples of publicly traded company. Bloomberg, wawa, and staples are example of successful private companies.
Public companies have greater liquidity because anyone can invest in them. Sometime Public companies like to report high profits to impress shareholders. Private companies don't need to impress anyone. They may add in extra expenses to cut their taxable profits, and their apparent value. Private companies can't sell more stock to raise money, which makes them more vulnerable when the economy slumps. One advantage private companies have, though, is that new investors typically buy a lot of influence over operations. Some investors may prefer that to public companies, in which a new shareholder has much less clout.
Private companies are not required to publicly disclose financial information, while public companies are required by the Securities and Exchange Commission to file an annual report documenting their performance in detail. The main advantage public companies have is that they can tap the financial markets by selling stock (equity) or bonds (debt) to raise capital for expansion and projects. The main advantage of private companies is that management doesn't need the approval of the stockholders and isn't required to file disclosure statements. Also, because private companies don’t have to disclose financial information, they can focus on long-term growth instead of making sure shareholders are getting their quarterly dividends.
Private company: Dell
Public company: Johnson & Johnson
Form Dr. Simon's lecture and from what most of you have written, it seems that the biggest difference is how the shares are publicly available or trading for public companies and not for private. Moreover, where the income comes from and the determination of profit vs cost to develop a new product. I do not know how I would make a determination of which to pursue if I was in the situation to do so. While private seems to have the advantage of not answering to stake holders and have more freedom to pursue what they want, they would have to risk more to do so. I guess at this point it would determine how much capital there is to invest.
The difference between a public and private company is the availability of obtaining a stock within the company. Both companies are owned by shareholders who share ownership of the company through stocks. If the stocks are only owned by a few individuals within the company and are not publicly traded, the company is a private company. If the stocks are available to the public, then it is a public company. There are many advantages and disadvantages for each type of company. One advantage a private company can have over a public company is the potential exemption of filing with the SEC. One advantage a public company can have over a private company is the level of transparency with shareholders.
Private companies are owned by a limited number of shareholders, while public companies are owned by many different stockholders. For private companies, this means a more direct impact on what is being done by the company and more control over many aspects such as what is happening with the company and who else may become a shareholder. On the other hand, public companies are owned by a multitude of people. Although a select few may make most of the decisions and such, there is much less control as to who owns how much of a company. One prime example of a public company which I personally have taken interest in is Disney. A prime example of a private company that is successful is S. C. Johnson & Son, Inc.
Personally, I never worked in public yet but according to all I had read tells me, the benefits and job security are a lot better than private jobs in general. A lot of people won't choose it though. Most of the reasons I saw they don't want to be stuck behind a desk job as a biomedical engineer. I personally won't mind that. As long as I can work, earn money, and live my life, it won't matter. And job security is a huge factor. A person like me who checks detail to the extreme and gets stressed can use that, to be honest.
What is the difference between public and private companies? Based on their differences, what are some pros and cons of each? Give an example of a private and public company, and state the successes.
I decided to participate in this thread to see the responses and bring a slightly different perspective. Perhaps what I will share may have some similarities to what is known to be true for private and public companies. As a teacher of thirteen years, I have had one year in a private school. It was easy for me to see that public was definitely a better option. Why? The private school where I worked was to "free" in their way of thinking and managing. They would cancel classes for a week or more to allow for a school-wide game. If students had a field trip, upon return, administration would cancel your classes if the students said they were too tired to go to class. The school heads had the attitude that the school should be student and parent-centered to the extent that it was obvious it was the students and parents who managed the school, not the administrators. I have worked in different public high schools where it was plenty obvious the private school's way of managing a school would never happen. How much of a private business is similar to the private school I just described?
What is the difference between public and private companies? Based on their differences, what are some pros and cons of each? Give an example of a private and public company, and state the successes.
In my opinion one of the main differences between public and private companies is their use of investors in their companies finances. Chik-fil-a and Apple are prime examples of private and public companies. Apple allows the public to invest in their company which can create much financial gain but is prone to fluctuation based on their perception in the media and the health of the company in general. Chik-fil-a has a different situation because they have a group of investors and they have to priortize their needs. Because of this there isn't as much money available as there would be if anyone could invest but their company's value is much more stable. Each scenario has its benefits and risks.
The difference between a public and private company is that the public company has shares that can be bought and traded via the stock market. A pro to this is the possible financial gain for both the company and the investors. A con to this is having to share all financial business and a lack of privacy. A private company does not selling or trading abilities because it has not gone public with an Initial Public Offer (IPO). The pro to this is being able to focus more on the customer value and not as much on the financial benefit of investors. The con, however, is having a limited resource of finances. An example of a public company is AMC movie theaters. An example of a private company is MARS or Dell.
