Advice for investing in local company

Malky

Superb informative post Malcnascar. Thank you.

Glen_Clark

redmalc wrote: »

I would have thought the two retiring directors would keep their shareholding if the company was so good,the dividends would finance there retirement.

Perhaps they feel the reason for the company's success is that major shareholders have been working there with the incentive to make it pay.
When they leave the company is more likely to continue to prosper if they make the OP a shareholder so he has a similar incentive?

Malky

Glen_Clark wrote: »

Perhaps they feel the reason for the company's success is that major shareholders have been working there with the incentive to make it pay.
When they leave the company is more likely to continue to prosper if they make the OP a shareholder so he has a similar incentive?

That's the way I see it. The company (and another before this one) has been built mainly on respect for the 2 main shareholders and the way they run a business. It has been profitable every year for the last 7 and has a healthy bank balance. Their work ethic has rubbed off on the other 2 shareholders and myself. It will be hard to emulate what they have done but am sure it will be possible.

Malky

I think the value of the company has been based on it's cashflow and profits. But what about assets and debts? They must make a difference to the overall value.
It's assets are 1 truck, staff, customer base, computer system and current stock. The company does not own the buildings or land.
It's debts are what is owed by customers? There are no loans and overdrafts outstanding.

Malky

Just to add a bit more about the type of business. It deals with trade and retail. Has a regular customer base with repeat business. There is, I feel, an opportunity to expand the business in the future.

Errata

If you've been invited to buy part of the company, then the company won't object to you tasking a good accountant to crawl all over its books, will it?
Can you afford to pay one and take a chance on not accepting the invitation, for whatever reason?

Malky

Getting an accountant to trawl the books wouldn't be a problem. I do know some of the figures but would do no harm getting a trained eye to look over them.

gozomark

Malky wrote: »

It's debts are what is owed by customers? .

no, those are assets

gozomark

Malky wrote: »

.
It's assets are 1 truck, staff, customer base, computer system and current stock. The company does not own the buildings or land.

so the only tangible assets are stock and a truck - what is the stock worth ?

what happens if the staff walk ? is the customer base diverse ?

gozomark

Malky wrote: »

The company .... has a healthy bank balance. .

thats another tangible asset - how big is the bank balance ?