An Interesting Fact About Private Equity

I’m experimenting with a video blog entry today. The text follows below the video…

Private Equity in it’s loosest definition is the ownership of companies that are, well, private. This would be as opposed to ownership in companies that are public – such as any company that is listed on your favourite stock market – which is a public exchange. Another way of putting it, is that if a company does not have shares trading on a recognized public stock exchange, it is a private company.

Here is some interesting data about Private companies that you may not have known:

• Of the 171,606 companies in the United States with revenues above $10 million per year, fully 151,345 of them are privately held companies – that’s 88%

• Of the 30,120 companies in the United States with revenues above $100 million per year, fully 22,696 of them were privately held companies – that’s 67%

Data taken from 2002 research by Dun & Bradstreet’s Market Identifiers Database

So, when you invest in a portfolio of US stocks (active or indexed), are you missing out by only investing in 12% of the companies with revenues over $10 million per year if you “limit” yourself to publicly traded stock?

Related posts:

1. Public Foundations versus Private Foundations
2. The Market Versus The Index
3. An Investment Company Owned By Its Clients