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.