Unquoted Companies : Their Contribution to the United Kingdom Economy

This study provides the first ever in-depth analysis of a group of firms that make an important contribution to the UK economy. Much has been said and written by policy-makers about the importance of small firms. But little is known about those small firms which are successful and grow, while remaining essentially private, family firms. These larger unquoted companies are the focus of attention in this book. A series of interviews with owners and managers provided a detailed picture of the legal framework, the operating characteristics and objectives, and the fiscal and financial constraints, of a small sample of these companies. A number of interesting characteristics emerged: the emphasis on family involvement and family continuity, the objective of building up the company taking precedence over profits, the relation of the private tax affairs of the owners to the operations of the company, and the apparent lack of financial constraints. The interview evidence then formed the basis for detailed quantitative analysis of the performance and financial characteristics of unquoted companies, in comparison with their quoted counterparts. These analyses confirmed the conclusions drawn from the interviews, and added some new insights. In particular, on virtually every performance comparison, the evidence indicates that unquoted companies outperform quoted companies. These conclusions (together with evidence presented to show how very substantial is the share of the unquoted sector in UK output) suggest that the sector should receive rather more attention from policy-makers than it has in the past. The major constraint the sector faces is the threat to the continuation of a company as an independent business if a principal shareholder dies and capital transfer tax becomes payable. This is a major study of interest to all who are concerned with the operations of private business in the United Kingdom -researchers and students in business and industrial economics,' banks and financiers, policy-makers, and, not least, the owners and managers of the firms themselves. Front Matter....Pages i-xiv Introduction and Summary....Pages 1-25 Issues for Investigation....Pages 26-38 A Review of Previous Research into the Unquoted Sector in the United Kingdom....Pages 39-53 The Contribution of the Unquoted Sector to the UK Economy....Pages 54-76 The Behaviour of Unquoted Companies....Pages 77-136 Comparisons of Performance and Objectives of Quoted and Unquoted Companies....Pages 137-183 Financial Characteristics of Quoted and Unquoted Companies....Pages 184-221 Back Matter....Pages 223-226