Private vs. Public Company: What's the Difference? by Christina Majaski

TL;DR - Public companies have gone through IPO, can issue bonds, and must report quarterly earnings. Private companies can only raise money privately.

Helpfulness - 5

Topic Tags - public, private, IPO, bonds, SEC

Questions answered:

  • What is a public company?
  • What is a private company?
  • What is the difference between the two?
  • How can each of them fundraise?

Summary:

  • Private companies are privately held, while public companies have had an IPO (initial public offering) and can be invested in through stocks, a form of equity.
  • Large companies are normally public, but exceptions exist.
  • Private companies can only rely on private funding, but “may still be able to sell a limited number of shares without registering with the SEC.”
  • Public companies can fundraise by selling stocks or bonds.
  • Public companies have to file quarterly earnings reports with the securities and exchange commission.

Follow-up Links:

  • Securities and Exchange Commission: https://www.investopedia.com/terms/s/sec.asp