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Who We Are
With more than 7,700 employees around the world, we are experts, leaders and advocates, all coming together to work towards one goal: to help our clients solve problems.
Our success is driven by our ability to empower organizations and people to overcome complex challenges and uncertainties with tailored solutions supported by active listening, hands-on guidance, specialized expertise and, most of all, human connections.
Across the Globe and Across the Street
With offices throughout the United States, Canada, Europe and Puerto Rico, our collaborative teams are ready to work with you to help your organization exceed your goals.
Mergers, Acquisitions and Subsidiaries
Who We’re Privileged to Partner With
NFP is a growth company, and an essential element of our growth is driven by our ability to attract high-performing firms, expand our community and be a catalyst to elevate value for you and your clients.
We partner with exceptional organizations, teams and people located around the world.
What We Do
Simply put, we help organizations and people solve their problems. We create tailored solutions driven by active listening, hands-on guidance, specialized expertise and human connection.
Property and Casualty
We provide proactive management of complex risks. Managing risk may be complicated, but we’re easy to work with – we implement new administrative technologies and solutions that work for you and your business. Our services are consultative and put your organization’s needs first. We do our research and uncover potential exposures before they’re a problem.
Benefits and Life
We take a holistic approach to designing benefits programs. This helps us ensure each piece works together for your people, who are integral to your organization’s success. More than that, we stay up to date on the latest trends and regulatory issues across the industry, enhancing your ability to attract and retain top talent with appealing benefits in today’s job market. We strive to make benefits administration as simple as possible with technology that gives your HR specialist the extra help they need. Our insurance solutions and financial services are built by top-flight, focused experts and backed by the very best insurance underwriters, giving you the peace of mind you deserve.
Public Companies vs. Private Companies: Key Differences to Know
We compared the legal and regulatory differences between private and public companies to help you decide which is best for your business.
Best for quick capital
Public company
Sell ownership as stock
Allow anybody to buy shares
Be required to file with SEC
Best for full control
Private company
Keep control of your business
Restrict which private parties can buy shares
Choose not to file with SEC
Apr 30, 2021
5 min read
We are committed to sharing unbiased reviews. Some of the links on our site are from our partners who compensate us. Read our editorial guidelines and advertising disclosure .
Last Updated: several months ago
We updated this piece to improve readability and to add increased emphasis on the advantages and disadvantages of having a private or public company.
Need to know the difference between public companies and private companies? Well, in a nutshell, a public company is one that’s traded on the stock market, while a private company isn’t.
Of course, there’s more to it than that. So in this guide, we’ll explain the big differences between private companies and public companies―and we’ll tell you why you’d want your business to choose one path over the other.
Public vs. private feature comparison
Before we get into the implications of being a private company or a public company, let’s make sure you understand the core definitions of each.
Public vs. private companies
Public company
Private company
Selling stock shares and bonds
Who can buy shares?
Limited private investors
Registered with the SEC?
Financial disclosures required?
Public companies
A public company sells company stock on the stock market. That means that the general public can buy shares, and therefore partial ownership, of the company. Because these shares get bought, sold, and traded on the stock market, you may also see a public company referred to as a publicly traded company. It’s the same thing.
In order to sell shares on the stock market, a public company must first have what’s called an initial public offering, more commonly called an IPO. That just means that it’s the first time that investors from the general public can buy company shares on the stock exchange.
Who goes public?
A company will need to earn north of $10 million before it can qualify for popular US stock exchanges. Sound steep? It is. But think of it this way: why would the public invest in stocks of companies that haven’t proven they have what it takes to be profitable? They wouldn’t.
That said, companies can technically go public with $0 of revenue through less visible channels, but this is probably not the smartest idea for a smaller company.
Private companies
A private company is owned by founders and private investors. It doesn’t sell stock on the public market. Instead, all ownership is held by those founders and private investors (and sometimes a few other types of individuals)―which is why you might hear a private company called a privately held company.
As you can probably guess, that means that a private corporation usually won’t have had an IPO. (In some cases, a public company can choose to go private again.) Instead, it will stick to private fundraising, often through venture capital.
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Best capital liquidity: Public companies
As we said above, a public company raises capital by selling stock on the public market. Note that they make money only off of stocks during an IPO or an FPO (follow-on public offering, in which they issue more stocks). When investors trade shares among themselves, the company does not earn cash.
Even so, public companies have more liquidity than private companies do, because they have the option to issue more shares. That can be a big advantage if a company has urgent cash flow needs.
Note that the amount a company earns from the stock exchange can vary widely. For example, Facebook raised $16 billion in its 2012 IPO.1 But many companies (including Blue Apron) have rocky IPOs in which they end up selling shares for far less than they’d anticipated.
Public companies may also sell bonds on the stock market. Bonds are like loans that companies get from investors, and you can learn more about them in our guide to the stock market.
Private companies, however, don’t make money via the stock exchange. Instead, a private company raises capital through private investors, like venture capitalists and angel investors. These investors may receive shares of the company (equity) in exchange for their investments. Keep in mind, though, that these shares can’t be traded on the stock exchange.
It’s worth mentioning that a public company probably also raised capital from private investors prior to its IPO. In fact, venture capitalists often want to steer the companies they invest in toward an IPO so they can cash out their shares and get a big payout.
While private investors can offer a lot of cash, the stock exchange usually offers more potential capital. In other words, a publicly traded company can probably raise more capital than a privately held company. (This is why many people think that all big companies are public, though that’s not necessarily true.)
So when it comes to cold, hard cash, public companies usually have the advantage.
Most company control: Private company
When a public company sells shares on the public market, investors who buy those shares get a small amount of ownership in the company. That means that a public company becomes accountable to its shareholders.
This can take a very direct form. Shareholders may have voting rights (if they purchased common stock), which allows them to influence the direction of a company that way. It’s not always quite as direct, though. Not all shareholders have voting rights (they may receive dividends, or a share of company profits, instead).
Make no mistake, though: a public corporation still needs to please its shareholders. Otherwise, a shareholder might try to dump company stock, lowering the company’s overall valuation and making it harder to sell stock in the future. Put simply, most investors don’t want to buy into a struggling company.
For that reason, public companies always need to have their shareholders in mind, which can seriously affect the direction the company takes. It often leads to an emphasis on short-term profit rather than long-term strategy.
A private company, on the other hand, retains more control over its direction. Yes, it will still be accountable to the handful of investors that have private equity in the company. But since those investors are often decision-makers within the company anyway, it allows the company to self-govern more effectively.
As a result, private companies often have more ability to focus on long-term growth rather than quarterly profits. So if a business owner wants to maximize the amount of control they have, they’ll probably want to stick to a privately held company.
Most SEC oversight: Public companies
As we mentioned above, public companies are accountable to their shareholders. But we don’t just mean that in the decision-making sense―public companies also have very real accountability requirements.
All public companies must register with the U.S. Securities and Exchange Commission (SEC). They must also file regular financial statements and disclosures, usually on a quarterly basis.
In other words, a public company’s finances are on the public record. And if it doesn’t keep up with SEC reporting requirements, a public company can get in big trouble.
A company under private ownership, however, doesn’t have to register with the SEC. Yes, its private investors will probably still want to see regular financial statements. But a private company does not have to disclose its financial information to the public.
To put it simply, if you want your company to be able to keep its secrets, you’ll need to keep it private―otherwise you’ll have to deal with SEC disclosure requirements.
https://www.nfp.com/about-nfp/https://www.business.org/finance/investing/public-vs-private-companies/
