To the typical challenges that all commercial enterprises face, there are a few additional ones that accrue to closely held corporations and family owned businesses. Most of these challenges derive directly from the market perception that the quality of corporate governance is compromised in the closely-held corporation. Notice our invocation of the term “market perception.” Sometimes “perceptions are reality” in the minds of investors, regulators and the pesky plaintiff’s bar.

Access to capital – either debt or equity issues – can be restricted because of the widely held belief that the directors are less likely to think independently of management and to hold management accountable to “best practice” standards.

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