More than 98% of U.S. businesses are not structured to their best advantage. Most privately owned businesses have only one company. But Global 500 companies have several, sometimes hundreds, of subsidiaries to achieve all their business goals.
Here’s a list with links to their SEC filing.
All of those subsidiaries have a purpose. What could you be missing? If they have a purpose, what could you be doing wrong?
Possibly income tax.
We have organized hundreds (thousands?) of businesses from initial startups, to complex businesses, including a significant number of companies needing to be re-organized to do business in the chaotic 21st century. We create all the companies, recognize the and define the operating relationships. We utilize every entity in the book, but primarily the big 4, partnership, LLC, S corp., C corp.
We are partial to forming companies in Wyoming rather than Delaware or Nevada. Wyoming is a tax free state and charges the lowest fees of any major player in the entity formation world, including Delaware & Nevada. Neither of those states are entirely tax free.
The best kept secret in the world is the Wyoming LLC. “Wyoming has pioneered a new type of LLC protection that precludes creditors from any legal or equitable remedy other than a charging order against the LLC interest, even as to Single Member LLC’s. The charging order is the “exclusive remedy.” Other remedies, including foreclosure and a “court order for directions, accounts and inquiries” are not available and may not be ordered by a court. This new LLC protection law means that you do not have to have 2 or more members in the LLC to get the charging order protection!” Call me to talk before disregarding it all together.
“Restructuring is the corporate management term for the act of reorganizing the legal, ownership, operational, or other structures of a company for the purpose of making it more profitable, or better organized for its present needs.” (Wikipedia.)
To meet their full potential, 99% of successful businesses restructure at some point. It’a almost impossible to avoid. The structure selected at founding is seldom adequate for a thriving business.
Caterpillar is a good example. They regularly re-organize. I can’t help but wonder if more businesses would be more successful if they followed the Caterpillar example. This is not the first time Caterpillar as restructured.
GE is also restructuring. This isn’t their only bite at the apple, but this reorg may determine GE’s future.
Within the last month a client’s business was hit with a nuisance suit. They mounted a defense, which was just a knee jerk reaction. When they told me about it, I told the principals since their vital business assets were in another company, the company owned nothing worth incurring a lot of legal fees to defend. I advised them talk to their attorney about abandoning the company. He agreed. Problem solved. But had they been doing business under their previous structure, they would have been if for a long and expensive lawsuit.