The difference between a private company and a public company is that the latter is traded on the stock market, or offers its securities for the public to buy. Private companies are neither government owned, nor traded publicly. Typically, private companies are owned by a small group of individuals.
Privately Owned Companies
Privately owned companies do not sell their company securities to the public, and are owned within a set amount of individuals privately. The majority of these ownerships are held by families, including Mars, Inc., the candy company; and Meijer retail stores.
Publicly Owned Companies
Publicly owned companies are those that trade their securities publicly, so anyone can buy stock in the company, as a way to finance the business. Publicly owned companies can be found trading in The New York Stock Exchange, Standard & Poor or NASDAQ. Larger public corporations include the likes of Proctor & Gamble and Google.
Private to Public
Once a private company makes the leap to public, they will start with an Initial Public Offering, or IPO. An IPO allows the private company to sell their stock to raise money immediately, while making the transition into the market.
One Better Than the Other?
When looking for a company to conduct business with, whether they are public or private typically does not enter a consumer's mind. Should one prefer to shop at Meijer over WalMart, due to its private affiliation, is completely a personal preference.
Purchasing Public Stock
When purchasing any public stock, it is important to understand the terms of the purchase, and know that one can make money as easily as they can lose it. Contact a professional investor prior to purchasing to completely understand the risks and rewards of the stock market.
Since 1995 Lindsey Hockman has been writing professionally for an advertising agency, and as a freelance copywriter, and volunteer for the Make-A-Wish Foundation. Her work has appeared on various websites, including Hello World Clothing. She received her Bachelor of Science in communications from Indiana University-Purdue University.