Growing concerns: small company finance: what the books don't say

Small, privately-held companies do not run like public corporations: the wealth of the owners and the company are entwined, so that company asset figures are misleading; dividends are determined by intangible factors, such as personal preference; financial statements reflect personal lifestyles; and the amount of debt and equity depends on the owner's attitudes towards risk. Relationships with banks are often antagonistic. Banks should read the financial statements of such a company with an understanding of the relationship between the owner, the owner's family, and the company in order to make good financing decisions.