Large, privately held companies in the United States are outpacing their publicly traded counterparts in two key performance metrics, sales growth and profitability, according to an analysis of financial-statement information from 2010 to 2014 by the financial information company Sageworks.
Sageworks found that private companies with annual revenues greater than $500 million have grown their sales at a much faster rate than public companies in the period since the recession, a time when most U.S. companies were recovering from flat or declining sales.
In addition, this segment of private companies is currently seeing healthier net profit margins than the average public company.
“It can be easy to dismiss this margin performance and revenue growth as just a perk of being small,’” said Sageworks analyst Libby Bierman in a statement. “But that argument isn’t as strong with this sub-section of privately held companies, which are probably more akin to public companies in way of operations and staffing than small businesses.”
In the most recent period, the trailing 12 months ended August 14, 2014, large privately held companies grew sales at nearly 11 percent over the previous year and earned net profit margins at an average of 8.6 percent. Bierman said that the large, private companies are growing sales at a pace that is 8 percentage points higher than publicly traded firms. “These extra 8 percentage points mean a lot to the owners of those private companies and to their ability to reinvest for further growth,” she added.