Closely Held Shares

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Closely Held Shares

Shares in a publicly-traded company in which a small group of shareholders control the majority of the shares. These majority shareholders tend to hold on to the company's stock, and, as such, only minority shares are traded, leading to light trade volume. Closely held companies are, by their nature, resistant to hostile takeovers and proxy wars. They tend to be more stable than other companies because their share prices are not determined by (sometimes irrational) investment decisions, but by the value of the company itself. However, closely held companies do not have access to as much working capital as corporations with more shareholders.
References in periodicals archive ?
Uber Technologies has agreed to pay Waymo approximately $245 million in closely held stock, to put an end to a high-stakes conflict between the two firms.
Publicly traded stock $41.7 billion Closely held stock $14.9 billion State and local bonds $14.7 billion Cash assets $14.6 billion Personal residence $8.4 billion Other real estate $13.1 billion Retirement assets $10.9 billion Other assets $49.1 billion Source: IRS Tax Statistics, Estate Tax Statistics, Table 1.
Although publicly traded stocks have the most widely diffuse ownership and have been mostly widely studied in literature, the most popular firm structure in the United States is the closely held stock firm (Nagar, Petroni, and Wolfenzon, 2011).
* $5,000 or more ($10,000 for closely held stock): Donor will generally need to have the gift appraised and report the appraiser's findings in Section B of Form 8283
This can be closely held stock or equity in a private company, as well as publicly traded stock or even units in a Family Limited Partnership.
FNC also provides a trading platform for closely held stock in ethanol and sugar beet facilities through an entity called FNC Ag Stock LLC.
Conversely, publicly traded stock, closely held stock, limited partnerships, other financial assets, and business assets all made up larger portions of the portfolio for the wealthiest of the male top wealth holders.
This article examines the pertinent factors to consider and the methods used in valuing closely held stock. Once the base amount is determined, various discounts, such as lack of marketability or lack of control, may be applied to ascertain the final share value.
Those responsible for closely held stock valuations are most likely to feel some pain in the short run.
"If you have real estate or closely held stock in a self-directed IRA, you have to have an independent third-party valuation," said Cindy Conger, a Little Rock investment adviser.
Trust income can be deferred by having the trustee make appropriate investment selections (e.g., a deferred annuity), or by donating to the trust low-income or non-income producing assets (e.g., growth stocks, closely held stock, or real estate).
Minority discounts are commonly seen among older business owners who have passed the majority of their private company stock to children and grandchildren but maintain a minority share of the outstanding shares of closely held stock. The older business person may wish to keep voting shares to have more of a voice in decision-making for the company.