About Private Companies
Sageworks is a financial information company that collects data on private companies. What is a private company, and why do private companies matter?
Out of the 27 million businesses in America, only about 6,200 are publicly traded on major exchanges. The rest are privately held. Private companies drive over 50 percent of GDP and 65 percent of new job creation in the United States.
- % Sales Change
- Net Profit Margin
Private companies can be organized using different classifications: corporations, limited companies, limited liability companies, unlimited companies, partnerships, sole proprietorships, or business trusts. In these organizations, ownership shares are not traded in a public market, and management is not required by law to publish financial statements or earnings projections. Because there are no public reporting requirements for private companies, their financial data and insight into their current financial trends have been historically unavailable. Public companies, conversely, must operate more transparently and file financial reports through the U.S. Securities and Exchange Commission. Privately held companies are typically smaller in revenue than publicly traded companies, but this is not always the case.
Given its impact on GDP and employment, it is important to know how this vital segment of the economy is faring.
Note that in a government report, “private sector” refers to all organizations outside of the government; “private sector employment,” for example, in a government report includes all people employed by companies, non-profits, or other organizations that are not affiliated with the government. For Sageworks’ financial data and in common financial discourse, “private” refers, instead, to the ownership of the companies’ stock as previously explained.
For a list of financial terms used to describe private companies’ financial health, refer to our glossary of financial terms.
You’ve got 27 million private companies in this country. They’re sitting down, looking at their revenue, looking at their profit, they’re looking at their cash flow. When they do not know how [public policy] is going to affect their bottom line, they’re going to stay on that fence [for hiring].