Comparing Investments in Private Firms against Public Companies
In general, firms that are publicly traded are easier to invest in because they can be bought and sold without difficulty on the stock market. As such, they tend to have superior quote market value and liquidity. However, public companies also have certain disadvantages, and one major criticism is too much of a focus on meeting the short-term expectations of Wall Street analysts and quarterly results, thus sometimes missing out on creating opportunities with long-term value. On the contrary, private firms are more complicated to invest in because it can take years before the investment can be sold again. Moreover, sellers and buyers would have to negotiate the prices. But as for the advantages, owners of private firms play a bigger role in the decision making process, and the earnings or any profits made are paid directly to investors.
