Valuation of a business

BartyBoy

SamsReturn wrote: »

There are so many ways to value a company, perhaps you should come out in the open with the other Directors and see how they feel.

I had no intention to expose the politics within the company when I first asked the question, this is why I only said I wanted to leave due to a personal reason.

I have tried to speak to other directors individually, and disappointingly I found that they are all pretty selfish. One of them told me he was very happy with his salary (earns £6k more than me) so he did not want a salary review. I told him I could say exactly the same thing if I were on his salary. Then the other director who earns £9k more told me he never agreed to pay rise, he told me to concentrate on making profit instead.

I requested for a group meeting a month ago and I am still waiting. I was hinted that the company wouldn't keep me if I decide to leave, not like director number 4 who managed to get a pay rise 3 months ago because the company did not want to lose him. My heart just sinked to the deepest ocean in this planet.

BartyBoy

agrinnall wrote: »

How much of your own cash did you invest in the company, either at set up or later? From what you say about the other directors I doubt whether you'll get back any more than you've put in, and maybe not even that.

We started the business by putting in £5k per person, and now the business has made over £200k profit in last financial year, there is no way I would agree to leave with just £5k.

sjbrun

How much money have you invested into the company?

BartyBoy

getmore4less wrote: »

Are you not getting most of your income through dividends to save NI?

We do pay ourselves via a salary and dividends, but the salary gap is still huge. I am getting £5-£9k less a year than the other guys while we are doing more or less the same thing every day.

Snakey

Get hold of the Articles of Association and any Shareholders Agreement that you signed, also your contract of employment assuming you have one.

There is no point taking this any further until you know exactly what the agreed process is for you leaving the company and for you selling your shares (or you can confirm for sure that all of these documents are silent on what happens in this situation).

Usually there will be some provision for this situation and this will often include an agreed process for you giving notice and what happens next, including a method of valuation if the parties can't agree a price.

A bit of paid-for legal advice may be for the best in the long run.

BartyBoy

sjbrun wrote: »

How much money have you invested into the company?

£5k as per other directors in the very beginning

TBagpuss

Do you have a shareholder's agreement and what does it say?

There are specialists who can carry out valuations, accountants should be able to advise.

BartyBoy

TBagpuss wrote: »

There are specialists who can carry out valuations, accountants should be able to advise.

I did wonder if an accountant could help but I wasn't sure.

If I can get hold of the account reports, can I use them to value how much my share is worth?

sjbrun

The problem is it is very difficult to get the company / the other partners to agree to buy your share back unless there is a share agreement in writing / in the formation documents.

Are you in a position to come to a mutural aggreement with them for you to leave?

What are you going to do if they refuse?

BartyBoy

sjbrun wrote: »

The problem is it is very difficult to get the company / the other partners to agree to buy your share back unless there is a share agreement in writing / in the formation documents.

Are you in a position to come to a mutural aggreement with them for you to leave?

What are you going to do if they refuse?

I was once told I would not get any dividends if I decide to walk out. By not receiving any dividiends I must not have any share of the business, so in that sense I would expect the other directors want me to sell my share back to the company. If the other directors cannot agree a cost of buying my share, then they will have to give me dividends every year even I am not working for the company. I personally would prefer to sell all my share of the business cos I want a clean cut between me and the other directors. I am not sure if I am making sense here. I am very sorry if not...