Private Company

A company whose shares are not able to be traded on the open market and are held by a limited number of owners or investors. Although businesses can exist as trusts, sole traders and partnerships, most begin as private companies, especially if they intend to raise capital. For the purpose of this guide, it is assumed that the entity is a private company.

The valuation of the company (that determines the value of the shares that are held in it) can be done via a variety of different methods and is often subject to negotiation with investors.