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Publicly vs. Privately-Owned Enterprises


The two most prevalent forms of company ownership in the world are private and publicly owned enterprises. Each form of a property provides its shareholders and the company with certain advantages and disadvantages. Privately-owned businesses usually make up for the majority of the small and medium sectors, whereas many large companies are public and trade stock on the financial markets (Tricker, 2015). Nevertheless, some large companies choose to remain private. The purpose of this paper is to compare the pros and cons of both types of companies and analyze why certain large organizations chose one form of property over the other.

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Pros and Cons of Publicly-Owned vs. Privately-Owned Enterprises

There are several considerable benefits to each form of company organization. Publicly-owned enterprises usually enter the market with an initial public offering, which is sold to potential investors in return for a percentage of future income. This type of offering can quickly provide finances to a company ready for expanding its reach and its potential market share. In addition, the company gets plenty of financial media exposure due to being present in the major markets. However, this growth comes at the price of decentralization, as new shareholders are allowed to affect company decision-making (Tricker, 2015). A public company undergoes great scrutiny and has to file reports on many of its financial activities, which is expensive and time-consuming.

Privately-owned companies do not have the advantage of a large pool of investors. Every individual sponsor is contacted privately, meaning a limited amount of capital derived from such activities. In addition, privately-owned companies have unlimited liability towards their owners (Tricker, 2015). However, privately-owned enterprises are significantly easier to manage due to a smaller pool of corporate shareholders, fewer to no annual reports presented to the government and the market, as well as substantial benefits and tax cuts.

Cases of Google, Facebook, Bloomberg, and Dell

Large companies have various reasons for becoming public, staying private, or turning from public to private enterprises under internal and external circumstances. Google went public in 2004, prior to its massive expansion into the market. The reason why the company went public was to attract investors to fund the predicted expansion. They managed to attract over 1.67 billion dollars in share sales (Strom, 2018).

Facebook, on the other hand, did so for completely different reasons. The company was growing too big, as the number of individual shareholders exceeded 500. According to the Securities and Exchange Commission’s rule from 1964, any company with 500 or more shareholders has to disclose its financial operations just like public companies do (Miller, 2014). In that sense, Facebook was a private company in name only, and becoming public only improved its position.

Dell was forced to go private from being public in 2013, due to its relatively poor standing in the market. Additional expenses, poor ratings, and disclosure demands hurt the company, which was the reason why it had to go private (Voigt, Buliga, & Michl, 2016). A few months ago, Dell went public again, without an initial public offering. Such a motion further illustrates that the initial privatization was made to cut losses and restructure the company.

Bloomberg was created as a private enterprise and remained that way throughout the years. Being private allows Michael Bloomberg (company owner) more flexibility through majority ownership, fewer efforts spent on financial disclosure, and reduced tax rates. Bloomberg has its niche and does not seek to grow, making a public offering a useless venture (Voigt et al., 2016).

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Privately-owned enterprises provide greater management flexibility, financial privacy, and tax cuts, at the expense of personal liability and slower growth rates. Public companies can leverage large amounts of money to fund their expansion and attract additional investors. However, this comes at the price of compliance with the Sarbanes Oxley Act and outside influence of the financial market. Companies like Google, Facebook, Dell, and Bloomberg have their reasons for choosing one form of organization over the other.


Miller, N. (2014). The Facebook IPO primer. Sudbury, MA: eBookIt.

Strom, T. E. (2018). Expand and centralise: Twenty years of Google. Arena Magazine, 123, 23-27.

Tricker, B. (2015). Corporate governance: Principles, policies, and practices (3rd ed.). Oxford, UK: Oxford University Press.

Voigt, K. I., Buliga, O., Michl, K. (2016). Business model pioneers: How innovators successfully implement new business models. New York, NY: Springer.

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