Closely-held companies describe any business entity that has a small number of owners and operators. This includes “close corporations,” which are special corporate entities with a small number of owners that are not publicly traded, sole proprietorships, partnerships with a small amount of partners, and LLCs with a small group of members. While most closely-held companies are also family businesses, Wright Ford Young & Co. refers to closely held companies as those businesses where there is not a link between the mutual influence by family and business on company policy and on the interests and objectives of the family. Closely-held companies will have two or more non-family owners or be private equity sponsored, the shares or membership units are not publicly traded, and the company is not registered with the SEC.
Issues in Closely-Held Businesses
Closely-held companies are usually smaller, and therefore face a different set of challenges than larger companies. Because of their smaller size, personal conflicts among constituents have a much larger impact on the business than they would at a larger company. Egos, disputes, and differing opinions and philosophies may cause problems that can halt a business in its tracks. Whether you’re a small or mid-sized S-corp, C-corp, LLC, partnership or sponsored by private equity, our experience working with closely-held companies like yours can help you tackle those challenges.
Some of the challenges and issues that closely-held companies face include:
- Determining the company’s valuation because there is no established market for the shares, which makes it difficult to established the value of shared ownership in an estate or gift tax situation.
- Establishing and implementing detailed buy/sell agreements in advance for the sale or transfer of stock at the time of the death, disability, or retirement of a shareholder.
- Raising capital is more difficult since shares of a closely-held company are not listed on a public stock exchange for investors to purchase and provide liquidity.
- Individual shareholders may face difficulties if they wish to dispose of their shares in a closely-held company since the shares are not publicly traded and shareholder agreements contain restrictions on the transfer of shares.
- Because a closely-held company is still a corporation, management has a fiduciary duty and obligation to make decisions that are in the best interests of the corporation rather than their own personal interests.
Why is Wright Ford Young & Co. right for you?
Your closely-held company needs more from its accounting firm than financial statements and tax returns. You need an accounting firm that knows and understands your industry, your market, your company, your customers, your situation, your project, your preferences and your process better. You need an accounting firm who can deliver the best outcome, faster, with the least risk, effort and disruption, with the fewest surprises at a competitive price.
Wright Ford Young & Co. is a strategic partner, whose experience and mission-specific guidance can help you achieve your important business objectives, minimize your tax burden, reduce compliance risk, attract the capital you need in order to grow, and maximize business value.