Why are private companies important?

Sageworks collects data on the financial performance of private companies, but why do private companies matter?

Out of the 27 million businesses in America, only about 6,200 are publicly traded on the major exchanges. The rest are privately held.

–Small businesses drive over 50 percent of GDP.

–Small businesses create approximately 65 percent of new jobs.

A “small business” according to the U.S. government is a company that employs fewer than 500 employees. While many of the nearly 27 million private companies may also be classified as “small businesses” and therefore count toward the stats listed above, there are also many other private companies (not publicly traded) that are much larger and are not included in the above figures. So, if you consider the impact that these large, private companies also have on GDP and employment, the significance of private companies is even clearer.

Given that significance, it is important to know through financial analysis how this vital segment of the economy is faring.