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Public Company vs Private Company

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Differences Between Public Company vs

Private Company

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 Limitedcompany
Public Period Offer - Financial
and private Analyst
company All can
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be huge. (250+ Courses,
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are different.

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The public company takes the help of general public and loses out on the ownership,

and they need to adhere to the regulations of SEC.

The private company takes the help of private investors
(https://www.wallstreetmojo.com/what-is-private-equity/)and Venture Capital
(https://www.wallstreetmojo.com/venture-capital/). And they don’t need to disclose

any company information to general public.

Public Company vs Private Company

Infographics
There are many differences between Public Company vs Private Company. Let’s have a look

at them one by one –

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What is a Public Company?

A public company can sell its own registered securities to the general public. After an IPO, a
company becomes a public company. A public company can also be termed as a publicly
traded company.

Publicly traded company means that the company can trade in public capital markets

(https://www.wallstreetmojo.com/publicly-traded-companies/) and can directly sell its

shares to the public. As per the US Securities and Exchange Commission (SEC)
 (https://www.sec.gov/), if a company has $10 million in assets and over 500 subscribers,
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the company has to register with SEC andVideos)
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The shares of a public company are shared by the shareholders, board of directors, and
management. A company becomes public to generate more capital for business via public

and as a result, they can expand their reach and market.

What is a Private Company?

A private company isn’t like a public company. A private company can’t trade its shares

among the general public. And the shares of private companies are not traded on public

stock exchanges.
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That doesn’t mean that private companies don’t have shares and there’s none who can own
Videos)
them. For private companies, the shares are owned and privately traded by few willing
investors. A private company is run in the same way a public company is run. The only

difference is in the case of private company, the number of shares traded is relatively
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smaller and also the traded shares are owned by limited individuals.

In the case of private companies, the capital often is sourced from venture capitalists.

Investing in private companies is perfect for VCs as they look for high-risk, high-reward
investments. Private companies can go public if they feel they need more capital to expand

the business. For that, they go for initial public offering (IPO)
(https://www.wallstreetmojo.com/private-placement-ipo-fpo-in-investment-banking/) and

issue shares to the general public.

A public company can also transform itself into a private company the help of a private

equity rm (https://www.wallstreetmojo.com/list-of-top-private-equity- rms/).

A Comparative Analysis of a Public Company vs

Private Company
 There’re many differences
Limited Period between
Offer - Financial a Public
Analyst All inCompany vs Private
One Bundle (250+ Company. Let’s
Courses, 1000+have
hoursa of 
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look at the top  differences between the two –

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Points of Differences

between Public Company Public Company Private Company

and Private company
 Limited Period Offer - Financial Analyst All in One Bundle (250+ Courses, 1000+ hours of 
A public company can sell its A private company can sell its
Videos)
1.    De nition own registered shares to the own, privately held shares to a

general public. few willing investors.

(https://www.wallstreetmoj
The stocks of a private
o.com/) The stocks of a public
company are owned and
2.    Traded on company are traded on stock
traded by only a few private
exchanges.
investors.

Until the private companies

A public company has to
reach $10 million and more
adhere to a lot of regulations
3.    Regulations than 500 shareholders, it
& reporting standards as per
doesn’t have to follow any
SEC.
regulations issued by SEC.

The primary advantage of a

The primary advantage of a privately traded company is

publicly traded company is that it doesn’t need to answer

4.    Advantage
that it can tap into the market to any stockholders & there’s

by selling more shares. no need for disclosures as

well.

Privately traded companies

can also be big companies.

The idea that a privately held
P bli l t d d i
 Publicly traded companies are
5.    SizePeriod Offer - Financial Analyst All in One Bundle (250+
Limited company
Courses, 1000+ hours of 
big companies.
Videos) (https://www.wallstreetmojo.c
om/privately-held-company/)

is smaller is utterly false.

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6.    Source of funds
For the privately traded
For the publicly traded
company, the source of funds
company, the source of funds
is few private investors or
is selling its shares and bonds.
venture capitalists.

Can a private company be a public company in

near future or vice versa?
The answer to both of these cases is a resounding yes. A private company can be a public

company by conducting an initial public offering (IPO)

(https://www.wallstreetmojo.com/initial-public-offering-ipo/) and then they can issue shares

to the general public.

On the other hand, a public company can transform itself into a private company. It can
often happen that the public company wants to remain restricted by few investors only. To

do this, they hire a PE rm and the PE rm buys a major portion of outstanding shares
(https://www.wallstreetmojo.com/outstanding-shares-stocks/) in the company and request

the SEC to delist the company from the stock exchange.

Recommended Articles

This has a been a guide to the top differences between Private Company vs Public

Company. Here we also discuss the differences between the two with examples,

infographics,  and comparison table. You may also have a look at the following articles to
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