Companies of a certain size often can't wait to "go public" and sell their shares on a stock exchange, reaping the influx of cash and recognition that accompanies an initial public offering (IPO). But many other businesses prefer to grow internally, eschewing the public trading of their shares altogether. These private companies have certain advantages: few reporting requirements, no legions of shareholders to please, and no undue focus on short-term goals.
In fact, some of the most successful companies in the world are private companies, and when run well, they can grow to sizes rivaling their largest publicly traded counterparts. So what are the world's largest private companies?
Key Takeaways
- Private companies don't sell shares on stock exchanges, like most well-known corporations do.
- They are not subject to the same reporting rules as publicly traded companies, giving them greater independence and flexibility.
- Some private companies today rival their public counterparts in size and revenue.
Defining Private Companies
Determining which are the world's most valuable private companies largely depends on how you define "private." By some rationales, any company that doesn't trade publicly would count.
Using that definition, the world's largest private company for many years would have been Saudi Aramco, which was founded in the 1930s as a subsidiary of America's publicly traded Standard Oil of California (forerunner of Chevron). Once Saudi Aramco became profitable in 1950, the Saudi king graciously let Standard Oil keep half the profits while expropriating the rest. The alternative was to have the government simply commandeer the entire company, which it did anyway in 1980. In 2019, Saudi Aramco went public, listing its shares on the Saudi stock exchange, the Tadawul.
Lists of the most valuable private companies typically exclude state-owned enterprises like the former Saudi Aramco, along with other giants such as China Mobile and PetroChina, and instead focus on companies that grew out of private-sector ingenuity and continue to flourish under private ownership today. Such lists can also be problematic. Private companies are, after all, private, and some of them are more secretive than others.
What Are the World's Most Valuable Private Companies?
Yahoo Finance, using data from the website Insider Monkey, recently listed these as the five most valuable private companies in the world, based on revenue figures from either 2021 or 2022:
- Vitol. An energy and commodities company founded in Rotterdam, it reportedly had 2021 revenues of $279 billion.
- Trafigura. A commodities trading company based in Singapore, it had 2021 revenues of $231 billion.
- Cargill. An American agricultural company, it had revenues of $165 billion in 2022.
- Schwarz Gruppe. An international retailer based in Germany, also known as Schwarz Group, it had estimated revenues of $145 billion in 2021.
- Aldi. A grocery chain based in Germany, it had 2021 revenues of $134 billion.
Wikipedia, a website not normally thought of as source of financial data, also offers a list of what it says are the "largest private non-governmental companies by revenue." It lists the same companies and in the same order as above, but with different revenue figures in several cases.
Meanwhile the website Eqvista lists largely the same set of companies, but in a somewhat different order, based on 2021 revenues. It has Trafigura in first place, followed by Vitol in second and Schwarz Group in third. The Chinese electronics company Huawei is fourth, followed by Cargill in fifth place. It assigns Aldi to sixth place.
What Is the Largest Private Company in the U.S.?
The largest private company in the U.S. is Cargill, headquartered in Minnesota. Forbes magazine, which publishes an annual list of America's top companies, notes that Cargill's first-place finish for 2023 represented the "third consecutive year that the agribusiness firm has taken the top spot," adding that, "This is perhaps no surprise—it's held the number one rank 36 of the 39 years that Forbes has been tracking private companies. Revenues for Cargill’s most recent fiscal year ending May 2023 were a record $177 billion, up 7% over last year."
Cargill, which describes itself as a "family company," operates in 70 countries and employs more than 160,000 people worldwide. It was founded in 1865.
How Do Private Companies Go Public?
When a private company's owners decide to take it public, they typically do so by offering shares through an initial public offering, or IPO. Private companies may go public as a way to raise capital or so that the owners, such as a venture capital firm, can cash out their investment.
Can a Public Company Become a Private One?
Yes, public companies can, and occasionally do, become private companies. Typically that's accomplished by buying up the company's existing shares. Companies that have made a transition from public to private can also go public again through an initial public offering, just as if they'd been private to begin with.
Is It Possible to Invest in a Private Company?
Yes, although it's more difficult and often riskier than investing in public ones. To invest in a public company you simply buy shares of it on whatever stock exchange it trades on. Investing in private companies is largely the domain of very wealthy and institutional investors who have the necessary expertise and can afford the financial risk. In part that's because of Securities and Exchange Commission (SEC) rules. However, there are some mutual funds and exchange traded funds that allow small investors to invest in private companies, typically a diversified group of them.
What Is a Closely Held Corporation?
A closely held corporation, also known as a closed corporation, is listed on a stock exchange like a publicly held corporation, but its ownership is concentrated in the hands of a very small number of investors and its shares may not trade often or at all.
The Internal Revenue Service defines a closely held corporation as one that (1) "Has more than 50% of the value of its outstanding stock owned (directly or indirectly) by five or fewer individuals at any time during the last half of the tax year" and (2) "Isn't a personal service corporation."
A personal service corporation, by IRS definition, is one whose employee-owners perform any activity "in the fields of accounting, actuarial science, architecture, consulting, engineering, health (including veterinary services), law firms, and the performing arts."
The Bottom Line
Some of the most successful companies in the world are privately held. While they often don't have the name recognition of their publicly traded counterparts, they can reward their owners in many other ways. With no need to worry about paying out dividends, buying back shares on the open market, or other gimmickry that would help make them more attractive to potential shareholders, private companies enjoy flexibility and adaptability that most public companies can only dream of. The companies discussed in this article would know that well.
