RSM424H1 Lecture Notes - Lecture 19: Dividend Policy
11 Jun 2017
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Chapter 19 business acquisitions and divestitures tax-deferred sales. Distinguishing features: a closely held corporation has either a single shareholder or a relatively small number of shareholders, so that the relationship between the shareholders and the corporation is very close. This type of corporation often develops a financial structure that mixes the affairs of its primary business with those of its shareholders. The corporation that houses the business has, in addition to the business assets, a number of investment assets that are not related to the operation of the business. The owner of the business is usually under greater pressure to sell the business to immediate family members of the next generation, or to senior managers or other employees who have given long services to the business. Typically, such employees and family members do not have the cash necessary to make the acquisition. The business of a closely held corporation is often sold in response to the owner"s wish to retire.
