Legal Issues and Challenges that Closely Held Companies Face

Legal Issues and Challenges that Closely Held Companies Face

Legal Issues and Challenges that Closely Held Companies Face

What Is a Closely Held Company?

A “closely held company” is describes 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.

A Small Organization Presents a Different Set of Challenges

Small, closely held companies 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. The best time to address these issues is upon company formation when all parties are excited about the opportunity and friendly toward one another.

The Capobianco Law Offices Can Help You Prevent Disputes Before They Start

The best way to resolve a dispute is to enlist the help of an experienced lawyer to try to prevent them from happening. By hiring an attorney to oversee the formation of your closely held company at the very beginning, you can prevent many of the pitfalls that could derail your business at various points in its lifecycle.

The attorneys at the Capobianco Law Offices can put protections in place to prevent deadlocks in decision-making, disputes, and other issues through carefully drafted agreements that protect the business entity, its founders, employees, relationships with third parties, and the business’ commercial assets.

For example, a detailed employment agreement that addresses both the employee’s and the company’s rights and obligations during the term of employment allows the employee to understand their responsibilities clearly from Day One. This eliminates any “surprises” down the road regarding employee responsibilities, compensation, or termination.

Likewise, carefully drafted founders agreements, like operating agreements and shareholders’ agreements, which avoid the dreaded 50/50 ownership split and address board/management impasses, can prevent decision deadlock when founders have differing opinions on which direction their company should take.

For more on how to enlist the help of a lawyer to protect your closely held company, visit to schedule a consultation with a small-business practitioner.