Published on:

Benchmarks tend to have incomplete revenue data from privately held companies

Privately held companies often keep to themselves the amount of their annual revenue. Unfortunately, if their legal department’s management has an interest in benchmarking but won’t disclose corporate revenue, many key metrics are eviscerated.

Notably, lawyers per billion of revenue and total legal spending as a percentage of revenue implode. Indeed, any normalization of a metric divided by revenue becomes impossible and the value of that company’s data shrinks considerably.

A more subtle effect also happens. If the data skews toward publicly traded companies, with under-representation by private firms, the data loses to that degree a comprehensive scope. Privately held companies may have lower legal costs and staff numbers because they have less securities work, which covers both registrations or filings and shareholder derivative or other securities-based litigation. So the published metrics are likely to be somewhat higher than actually prevails because the (lower) studies undercount the lower data of companies without securities traded on exchanges.

Improve representativeness, you private companies (and public ones, too)! Click on the box upper right to take the six-minute, confidential online survey of your fundamental 2009 metrics and get your full report in April.

Posted in:
Published on:

Comments are closed.