Corporate Strategies to Structure and Fund Stock Redemptions in Closely Held Corporations
National Public Accountant
How does a closely-held business provide capital for future growth and additional shareholders when the older shareholders retire or no longer remain active in the business? Attracting future shareholders poses a problem. As a practical matter, shares of a closely-held corporation can be sold only to the remaining shareholders or to the corporation itself because of: (1) the lack of marketability of such shares, and (2) the reluctance of outside parties to invest in small corporations--especially to acquire a minority interest.
Both the shareholders and the corporation must acknowledge this lack of marketability and decide, in the event of the death or retirement of a shareholder, who should purchase the shares--the remaining shareholders or the corporation. This decision should be made well in advance of the actual transaction.
Lockwood, M. Jill, Leslie B. Fletcher.
"Corporate Strategies to Structure and Fund Stock Redemptions in Closely Held Corporations."
National Public Accountant.