Life is certainly more rewarding in virtually every conceivable realm when it is marked by diversity and the opportunity for an individual to optimally select a path going forward by choosing from among various alternatives.
That’s equally true whether picking an ice cream flavor, a cable TV offering or an article of clothing from a retail rack.
And it’s just as true for any business entrepreneur in Ohio or elsewhere who has a solid commercial idea and is reflecting upon a business form that will best promote it, safeguard against downside risk, help fuel growth, create funding opportunities, ensure a controlling interest and foster long-term profits.
There are myriad business models operative across the United States, which we readily allude to on our website at the Dayton commercial law firm of Gottschlich & Portune. They centrally include these forms:
- S corporations
- Limited liability companies
- Limited liability partnerships
Additionally, though, they also encompass other opportunities, including sole proprietorships and closely held corporations.
We touch upon that last-referenced form today, given that some business principals find a closely held business to be the ideal structure to promote their corporate vision and prosper.
In a nutshell, the stock of a closely held entity is publicly traded, but only marginally so. That is, a limited number of shareholders — often family members or other closely intertwined individuals — control most shares and thus the company’s destiny. Those shareholders tend to keep their shares for a long period, thus yielding relatively stable share prices.
With fewer shares being routinely traded, volatility — e.g., hostile takeovers, irrational market jumps and dips and so forth — is comparatively reduced, although so, too, is the chance to optimally engage in material fund raising through share sales of a high magnitude.
As is the case with every business form, the closely held business model makes optimal sense for some entrepreneurs and scant sense at all for other business principals. Every entrepreneur has a unique take on business matters ranging from control, fund raising and growth to liability, risk mitigation and additional matters.
An experienced business lawyer can candidly discuss entity formation concerns and other commercial matters of interest with a business principal seeking to employ strategies that both promote growth and protect against operational downsides.