Working out share price

MaxJ

Hi.

I have come across various methods used for working out share prices, and am a bit stuck. I have inherited some shares in a family business which I don't really know too much about, and was wondering what their value might be should I come to sell them.

Basically I have 10,169 shares that have paid half-yearly dividends of between 0.04p and 0.06p per share over the course of the last 3 or four years. This has led me to believe that they could be worth a bit, as I have received between £800 and £1200 per year in dividends.

Does anyone know of a formula for working out what these shares could be worth simply by looking at the amount of shares and the amount they have paid in dividends?

Any help is very much appreciated,

Max

Jegersmart

No. Dividends are not a set ratio based on share price....

Take the company name of the shares you hold and then google "*Company Name* Share price yahoo" or similar and it will tell you what the latest share price is.

Based on basic maths, if we make an assumption that the dividend yield is say 4% then it would seem likely that each share may be worth around £2.50-£3.00 or so - but as I say it will take you 30 seconds to find the share price and take it from there.

Good luck

J

Shaolin_Monkey

Shares in a family business? Am I correct in assuming this is a private company and not traded publicly on a stock exchange?

alecpr

Hi,

Share price has nothing to do with dividends, some FTSE companies pay a 5% dividend in relation to their share price, others pay 2%, 1% or even nothing, they all have different market capitalisations that are unrelated to their share price.

Occasionally a dividend will support a weaker companies share price, but you can't work out what the share price is from the dividend.

The question you need to answer is if the share is listed on a market (LSE, AIM etc). If it is then you can get a share price quoted by a broker or online. If it isn't then you need to find someone who wants to buy your share of the company privately (maybe the other owners would like to increase their stake?).

In this case, in order to sell your shares at a sensible price you'd need to know what percentage of the company you own and how much the company is worth as a whole, or at least have an idea of what that would be.

To estimate the value of the company you'd need at the very least a few years of their company accounts.

MaxJ

Thank you all for the responses, and for clearing this up.

No the company is not listed on the London stock exchange, this is why I am struggling to find current individual share prices.

Max

Ark_Welder

Try the following as a starting point: http://en.wikipedia.org/wiki/Business_valuation

Also search the web for business valuation. One result is a calculator - but I haven't a clue as to its reliability! Alternatively, the business's accountant may be able to provide a figure.

I was thinking that valuing along the lines of venture capital might also provide a result - one method is based upon cash flow. But this might just give the same results as above.

Something from the above might give an indication of a fair valuation of the business, but if the intention is to sell shares to someone else, then they are, ultimately, worth only what they are prepared to pay.

Shaolin_Monkey

There's no market as such for private shares so you'd have to find someone to buy them off you (probably someone within the company). From what I can gather the price may be negotiated unless there is something in the companies Articles of Association specifying how they are to be valued. I found this which has a few useful bits of info : http://www.lawdonut.co.uk/law/ownership-and-management/shares-and-shareholders/issuing-and-transferring-private-company-shares-26-faqs#18

joerugby

It's likely that your shares are worth very little unless someone really wants to buy them. The time when they will have a real value is when the majority shareholders want to sell the business on to someone else and you can piggy back on their deal.

An exception to the above may be where the Articles of Association or a related shareholders' agreement contain some provisions regarding sale and valuation but this is unusual. You could try asking the company secretary (if there is one), or one of the directors

jimjames

MaxJ wrote: »

Thank you all for the responses, and for clearing this up.

No the company is not listed on the London stock exchange, this is why I am struggling to find current individual share prices.

Max

You won't find any share prices for non-listed shares.

Any idea what proportion of the company these shares are? If negligible eg 1% then you have very little say in it and may not find a buyer except at a minimal price.