Privately Owned

A company that is not publicly traded on a securities exchange. The majority of companies are privately owned, usually by either one individual or by a small group of individuals. Although offering securities for sale to the public can be a good way to obtain large amounts of financing, public ownership requires considerable effort to ensure compliance with securities regulations. Public ownership is generally impractical for small and medium-sized business.

For a variety of reasons, ownership stakes in privately owned companies are often much more difficult to sell or transfer. Securities laws place higher restrictions on selling private ownership stakes, since dealing in these securities is often much more complex. For instance, accounting records may be inaccurate, unaudited, and/or not in compliance with Generally Accepted Accounting Principles.