Special Considerations For Closely Held Business

Full Video Transcript

It is possible to be a legal corporation with shareholders and not sell shares and one of the public stock markets such as the New York Stock Exchange. Corporations that do not publicly seller shares are sometimes referred to as closely held businesses, meaning that no public market readily exists for the sale of its shares. Typically, only a few people own shares of a closely held business making it easier and faster to make business decisions. One of the most significant issues associated closely held businesses is how to value them. Since there is no ready market for business shares, it can be difficult to determine how much each share of the business is worth. This can be an issue in determining business value, or when transferring individual shares of the business. Another important issue facing closely held businesses is what you do when a major shareholder leaves the business. In order to prevent a business from closing, the business must either have a plan to allow someone else to buy the shares or the other existing owners must purchase the shares. The vast majority of U.S. corporations are closely held businesses so these problems can be overcome if properly addressed.

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