Can I buy in to my Employer?

Pincker

I have been with my employer, a small Financial Adviser firm, for over 10 years. I am a 'paraplanner' which means i provide support to the advisers and want to continue my career here long term. I'm currently studying for the Diploma. There are 5 shareholders, all of which have only a range of between 3 & 10 yrs max time here before they retire. I am 34. Is there a system where they can offer me some kind of 'buy in' package over a number of years? I don't know if this is something they would consider but I would like to put it to them.

Pincker

...I am not financially in a position to buy any considerable shares myself but is there a way they could do this? I am thinking of my security for the future

anamenottaken

Pincker wrote: »

I have been with my employer, a small Financial Adviser firm, for over 10 years. I am a 'paraplanner' which means i provide support to the advisers and want to continue my career here long term. I'm currently studying for the Diploma. There are 5 shareholders, all of which have only a range of between 3 & 10 yrs max time here before they retire. I am 34. Is there a system where they can offer me some kind of 'buy in' package over a number of years? I don't know if this is something they would consider but I would like to put it to them.

You refer to the organisation as a "firm". Is it a limited company or a partnership?

If it is a limited company, then of course they can sell you shares (either those owned by one or more of the existing shareholders or those which are authorised but not issued) over whatever period they choose. They could issue shares to you in consideration of your work contribution rather than as a straightforward sale.

If it is a partnership, they could invite you to join them and form a new partnership at any time.

Would you not already know that if you are working in an organisation of financial advisers?

Notmyrealname

Retiring doesn't prevent you from being a shareholder and if you were retiring and had a 20% share in the profits of a company would you want to give it up?

By all means ask them but I would expect they're shareholders as they are all partners in the business but formed it as a Ltd company and use this as a way of drawing their percentage of the profits. If that is the case, expect to be told no.

Pincker

Thanks for your replies. It is a Ltd company - is it the norm for an 'employee' to approach the shareholders and suggest such a thing? One shareholder retired last summer and he wanted out, so the remaining ones personally raised the funds to buy him out. Then one of those shareholders left unexpectedly to pastures new - and within months of signing a new agreement, and so the remaining holders had to then dig deep again. What you say there, notmyrealname, is the correct scenario, they do exactly that by paying themselves divs.

agrinnall

The problem for the existing shareholders with allowing you to buy into the company is that they either have to sell some of their shares or issue new shares, which dilutes their own holding. Either way they get a lower income and they may not be prepared to do this. Still, it shouldn't hurt to ask, although if they do turn you down they may then think that you won't want to stay (and maybe you won't) so they might start to think about finding someone else to do what you do.

Emmzi

In terms of a scheme - a bank loan is more tradtional, possibly secured against your home to get a lower rate.

Having i=your employment ad all your investment in one company may not be a great way of risk spreading though.

persa

There are plenty of tax efficient ways of enabling employees to buy into a company - however the question is, would your employer want to offer you this opportunity? If they were happy for you to have a stake in the company, wouldn't they have offered by now?

Regarding dividends, they can always issue a new class of share that doesn't carry the same rights as the existing class(es) to avoid having to give you the same amount of cash as the other shareholders if they do want to give you shares. But I would be surprised if they did.

If you approach the shareholders and they refuse to let you have a stake, what is your next move? Are you prepared to threaten to resign? Would that have any effect on them, or would they be content to replace you?

Pincker

persa wrote: »

There are plenty of tax efficient ways of enabling employees to buy into a company - however the question is, would your employer want to offer you this opportunity? If they were happy for you to have a stake in the company, wouldn't they have offered by now?

Regarding dividends, they can always issue a new class of share that doesn't carry the same rights as the existing class(es) to avoid having to give you the same amount of cash as the other shareholders if they do want to give you shares. But I would be surprised if they did.

If you approach the shareholders and they refuse to let you have a stake, what is your next move? Are you prepared to threaten to resign? Would that have any effect on them, or would they be content to replace you?

Hmm, lots to think about here. Some really good points of view and comments.

Notmyrealname

Pincker wrote: »

What you say there, notmyrealname, is the correct scenario, they do exactly that by paying themselves divs.

Unless a miracle happens, the answer will be no. The opportunity for them to do has happened twice now. A company can have just one shareholder.

Slinky

Notmyrealname wrote: »

Unless a miracle happens, the answer will be no. The opportunity for them to do has happened twice now. A company can have just one shareholder.

But it may the case they didn't think the OP would be interested/could afford to buy in.

If you don't ask, you don't get.