We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is a Privately Held Company?

Mary McMahon
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

A privately held company is a company which is held by a small group of private stockholders who do not trade their equity in the company in the public market. Frequently people make the mistake of assuming that such companies are small. In fact, some very large global companies such as Mars, Bosch, and Ikea are privately held companies, and together the world's largest privately held companies make up a great deal of the global market. There are, of course, also many small companies which are privately held.

Such companies are often family owned and operated. These companies may prefer to remain private so that family members can retain control over the company. Other privately held companies have different reasons for remaining private, and a privately held company also has the option of going public and becoming a publicly traded company on a stock exchange. Going public allows a company to tap into capital and may be done at a strategic time.

The key disadvantage of being a privately held company is that the company will not have rapid access to capital because it cannot sell stocks and bonds on the open market. This means that such companies need large reserves of funds to operate, or they need to be able to access private investors who can provide capital.

Also known as unlisted or unquoted companies, these companies are not subject to the same reporting and transparency requirements as public companies. A public company must disclose financial information and operate in a way which benefits its shareholders. This requirement is not in place for private companies. Companies like Mars which prefer to operate in secrecy see the lack of reporting requirements as a distinct benefit.

Not being held to accountability standards can also allow a privately held company to engage in unusual business practices, which are not necessarily inherently harmful. Companies can opt to pursue investments or lines of activity which might seem odd and wait for these activities to pay off, rather than feeling pressured by stockholders.

Many governments require privately held companies to keep stockholders below a set number. This is designed to prevent companies from operating effectively like public companies without any accountability. The requirements vary; some governments allow companies to have up to 500 stockholders before they are required to go public, while others restrict the number of stockholders a privately held company may have to a much lower maximum, like 50 or 100.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments
By EliseP — On May 11, 2011

What are the different types of small privately held companies out there today?

Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.