• What is a private company?
• Characteristics of private companies
• Types of private companies
• Difference between private company and public company
• Examples of private companies

We explain what a private company is, its types, characteristics and examples. Also, differences with a public company.

Private companies focus on profitability.

What is a private company?

When we speak of a private company, we generally do it to distinguish them from public companies, that is, from those that are wholly or partially owned by the company. Condition. This means that private companies are those whose majority or total shareholders are capitals private, and that, therefore, are administered according to the independent will of the latter.

As a whole, private companies make up the so-called “private sector” of the economy, whose interests are centered on cost effectiveness and obtaining profits, in exchange for the competitive sale of products or services. Control of Profits This sector is considered central in capitalist economies and is often used as an index of wealth generation for a company. nation.

Private companies arise by free association of their private founders, or due to privatization actions or private sale of public companies.In any case, its main task is to generate profitability, that is, to accumulate capital and enrich its owners or shareholders, be they natural or legal persons.

The history of private companies dates back to Renaissance same, when the first formal organizations for the International Trade and, later, to industrial production. The success and the emergence of this type of organization took place at the hands of the monarchical and imperial states, who saw in them a form of political and economic expansion during the so-called Mercantilism.

Characteristics of private companies

Private companies are characterized by the following:

• Are private propertyIn other words, its owners or shareholders are free and independent actors, and not the State. It is possible, however, for the State to buy Actions in a private company, without this meaning the loss of your autonomy. Except in cases where the State is the majority shareholder.
• Its fundamental mission is to be profitable and generate profits, that is, to contribute through production and commercialization with the generation of private wealth.
• Its operation is governed by the laws of the nation in which they carry out their economic activities. They are susceptible to auditing and inspection of different kinds. That means that, depending on local laws, companies are more or less obliged to be transparent with their finance and responsible for the consequences of their activities.
• The heritage of the organization is always private, as well as the property of the means of production. In addition, two types of workers Salaried employees: the administrative staff, who keep the company structure running, and the workforce, who carry out the productive activity.

Types of private companies

Private companies can be of different types, according to their administrative organization. These types are:

• Sole proprietorship. It refers to personal businesses, owned by an individual or owner, who runs it in person or hires others to do so. These companies are usually small and their owners bear the total responsibility of your debts.
• Association. In this case, two or more people come together to achieve a similar economic task, that is, they associate to generate profits. The partners of the company will be its owners and will have full responsibility for their debts, depending on the organizational model they follow. There are three categories of partnerships of this type: general partnerships, limited partnerships, and limited liability partnerships.
• Corporation. Also called joint-stock companies, they are for-profit limited liability companies, whose legal personality is different from that of its members, that is, it is managed by an administrative council, but is owned by a diverse set of shareholders, which can reach to be very broad. Whoever controls the majority of the shares will have greater quotas of power within the conduct of the interests of the company.

Difference between private company and public company

The fundamental difference between a private and a public company is, as we have said before, the ownership of its shares. That is, if the company belongs to the public or state sector, or to the private sector. However, other differences derive from this, such as:

• Private companies pursue profitability above all else, while public companies may have objectives other than profit, such as the redistribution of wealth or the defense of public interests.
• Decision-making in private companies rests with their administrative committees, while in public companies it is in line with government decisions.
• The management and management of resources in private companies is usually more free and autonomous than in public companies, since in the latter the owner is the State. Thus, for example, the sale of the assets of public companies cannot occur without the approval of government entities.

Examples of private companies

The following are examples of private companies from different countries:

• Banco Bilbao Vizcaya Argentaria (BBVA). Spanish company dedicated to the financial and banking sector, with headquarters in Madrid and Bilbao, and agencies in numerous Latin American countries, Spain, the United States and Turkey.
• LATAM Airlines. A multinational aeronautical company based in Santiago de Chile, founded in 2010 by the merger of two much older airlines: the Chilean LAN and the Brazilian TAM. It is the largest and most important airline of all South America.
• Editorial Anagrama. Spanish company founded in 1969 by the well-known publisher Jorge Herralde and dedicated to the publication and sale of books in different collections, literary and commercial. Its catalog is one of the most prestigious in the publishing world in Spanish, and annually awards two important prizes for unpublished works: the Anagrama Essay Prize and the Herralde Novel Prize.
• Hyundai Motor Company. South Korean company in the automobile manufacturing industry, headquartered in the city of Seoul. Founded in 1967, it is the sixth largest automaker in the world.