Is It Possible for One Person to Own 100% of a Company Pre-IPO?

Yes, many companies are founded and owned by a single person, especially in the early stages. It is indeed possible for one individual to own 100% of a company before it goes public (pre-IPO). This situation typically arises in the form of sole proprietorships or small startups where the founder maintains full ownership. However, as the company grows and seeks external funding, the ownership structure may become more complex.

LLCs and Sole Proprietorships

Starting a company as an LLC or as a sole proprietorship allows for complete ownership by one person. The founder is the sole shareholder in both cases. In an LLC, the founder does not need to add any partners, ensuring full ownership.

Why 49%?

It's important to note that businesses rarely try to keep one person owning 100% of the company, even through the primary market. They often seek to distribute ownership to maintain control and attract investors. Typically, companies make 49% of the stock available, leaving a controlling portion in the hands of the original owner.

Forming an LLC or Corporation

For those looking to start a company as the sole owner, the process involves forming an LLC or a corporation. Many small businesses are indeed owned by a single individual, whether it's through an S corporation or a New York LLC. It's wise to consult with a business incorporation expert like Windsor Corporate Services, as they can guide you through the process and ensure compliance with regulations.

Exceptional Cases

While it is rare, there are instances where one person can own 100% of a company until the pre-IPO stage. A notable example is Spanx, co-founded by Sara Blakely. As a large, well-known company, Spanx can generate interest in a public offering, but it's rare that a company grows so strong that it does not need outside capital until the IPO phase.

Key Points

It is possible for one person to own 100% of a company before it goes public. This occurs more commonly in sole proprietorships or small startups. Purchasing the shares of other owners often requires a buyout negotiation. Many companies retain a controlling stake for the original owner, typically 49%. Special cases like Spanx exist but are not common.

Whether you're starting a sole proprietorship or an LLC, it's essential to understand the implications of ownership. Consulting with a reputable business incorporation expert can help ensure your business is properly set up for success.