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Simple English definitions for legal terms
private company
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A quick definition of private company:
A private company is a type of business that doesn't sell its shares on public markets. This means that people can't buy and sell parts of the company like they can with public companies. Private companies can be owned by one person or many people, and can be small or very large. Even though private companies can't sell their shares to the public, they can still raise money by selling shares to private investors.
A more thorough explanation:
A private company is a type of business that does not sell its securities on public markets. This means that the company's ownership is not available to the general public. Private companies can be structured as sole proprietorships, partnerships, or corporations, and can range in size from small businesses to large international enterprises.
For example, a family-owned restaurant is a private company because it is not publicly traded. The owners of the restaurant are the only ones who have a say in how the business is run and they do not have to disclose financial information to the public.
Although private companies cannot sell their securities without first conducting an initial public offering (IPO), they may still be able to raise capital by issuing securities through private placements. This means that the company can sell shares of ownership to a select group of investors, such as venture capitalists or angel investors.