Privately owned businesses have different needs and are exposed to different taxation, commercial, regulatory and other issues than publicly owned businesses in relation to equity participation by employees.
Unlike their public counterparts, privately owned businesses are not always carried on through a company structure and often favour trust and partnership structures. Equity in them is normally tightly held by one or more family members, with ownership and management often closely related. Their comparatively limited financial resources also mean privately owned business can encounter difficulties in attracting, retaining and rewarding key employees and involving them in any succession plans.
This paper considers these issues by canvassing typical and alternative equity participation arrangements relevant to privately owned business structures, including the different considerations applying for blue sky compared to mature businesses.