The stock market may hog all the headlines, but recent data show that privately held businesses outperformed public companies in two important metrics between 2010 and 2014.
Privately held companies in the U.S. with more than $500 million in annual revenues have grown sales faster than their publicly traded counterparts since the recession, according to data from financial information company Sageworks. Large private companies have generated average sales growth of 13.8 percent during the past four years, compared to just 3.3 percent for public companies. This same group of private businesses has also generated slightly higher net profit margins every year since 2010.
"It can be easy to dismiss this margin performance and revenue growth as just a 'perk of being small,' 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," Sageworks analyst Libby Bierman said in a statement.
During the 12-month period ending August 14, 2014, large private companies grew sales at nearly 11 percent, compared to roughly 3 percent for publicly traded companies.
"These extra 8 percentage points mean a lot to the owners of those private companies and to their ability to reinvest for further growth," Bierman said.
Recent data also reveal slow revenue growth for S&P 500 companies during the 12-month period ending June 30, 2014. Companies in this segment grew sales by just 3.4 percent, according to the National Center for the Middle Market, a partnership between GE Capital and The Ohio State University Fisher College of Business.
"Being private allows you to cut through the noise and focus on what matters," Sageworks chairman Brian Hamilton said in the statement. "That is, growing your business."
Sageworks maintains a proprietary database of more than one million privately held financial statements collected from accounting firms, banks and credit unions. Data on publicly traded companies was pulled from Thomson Reuters and includes companies from most major industries, such as construction, retail, wholesale and manufacturing.