Valuation of a business

getmore4less

BartyBoy wrote: »

I see, and what about the initial £5K investment, it turned to £24K profit in the first year and £40K profit in the 6th year, can I not take it into account please?

but you have been paying out some of that as dividends so there is not so much left.

What do the accounts say the company is worth?

getmore4less

gingerdad wrote: »

i would say you're not in a great position, as the only people likely to buy out your shares are your co-directors. not much market value

but if your next profit is 200k then roughly work 600-800 thousand, but you need to get the company valued by an independent valuer.

could you not leave - keep your share holding and just get paid you dividends?

I suspect they(remaining 4) will just change the remuneration structure and reduce the dividends paid out.

steampowered

Do you have a shareholders agreement? If so, you need to read it.

The other thing you need to do is to read the company's "articles of association", which is publicly available on the companies house beta website.

If the company was established professionally with a proper shareholders agreement and properly drafted articles, you might find that leaving your employment is deemed to make you a "bad leaver". In that scenario you may either have to sell your shares back to the company, or your shares will be converted into worthless "deferred shares" which do not carry a right to receive dividends. This would be a common arrangement in a management buyout situation. Before deciding to leave your employment you need to understand what the consequences will be for your share position.

The other thing you need to do is to check the company's latest annual return to see whether the share ownership position is as you describe it.

If you want to get genuine value out of this a bit of paid legal advice is a good idea.

getmore4less

Did you go to the companies house web site as recommended previously and again above


https://beta.companieshouse.gov.uk

*~Zephyr~*

steampowered wrote: »

Do you have a shareholders agreement? If so, you need to read it.

The other thing you need to do is to read the company's "articles of association", which is publicly available on the companies house beta website.

If the company was established professionally with a proper shareholders agreement and properly drafted articles, you might find that leaving your employment is deemed to make you a "bad leaver". In that scenario you may either have to sell your shares back to the company, or your shares will be converted into worthless "deferred shares" which do not carry a right to receive dividends. This would be a common arrangement in a management buyout situation. Before deciding to leave your employment you need to understand what the consequences will be for your share position.

The other thing you need to do is to check the company's latest annual return to see whether the share ownership position is as you describe it.

If you want to get genuine value out of this a bit of paid legal advice is a good idea.

THIS!

Having gone through the procedure of a Director leaving in the past 12 months, I can say that the Shareholder's Agreement is both a curse and a saviour, but it will tell you exactly how to proceed.

If you want a valuation, speak to the company Accountants. In a black and white world the company is only worth what someone will pay for it, but in practice, no one is going to want to buy you out and your only option is for the company to buy your shares. Your Accountants will be able to give you a valuation, but all the Directors will need to agree to the valuation.

motorguy

Dependent on the outcome of that, then the most sensible financial solution would be to stay in the job on the slightly lower pay and keep taking the dividends?

I'm assuming the O/Ps role is a role that the others dont see as as "valuable" to the overall running of the company as theirs is - eg - IT person or something like that?

Undervalued

getmore4less wrote: »

If 3 out of the 5 of you don't like the way the business is being run as shareholders you have meetings and remove them from the post.

Apologies if I am out of date but I think you will find it needs more than a simple majority to remove a director. "A resolution in writing signed by all of the other directors" rings a bell.

Undervalued

steampowered wrote: »

Do you have a shareholders agreement? If so, you need to read it..........


.........If you want to get genuine value out of this a bit of paid legal advice is a good idea.

Exactly.

Unless there is a shareholder agreement the OP's shares are worth what somebody is prepared to pay for them and not a penny more!

BartyBoy

motorguy wrote: »

Dependent on the outcome of that, then the most sensible financial solution would be to stay in the job on the slightly lower pay and keep taking the dividends?

I thought of that option before, but the back of my mind keeps asking the same question – what makes me get £5K less a year while I am doing more or less the same as the other directors. I have already earned min. £30K less than the other directors in total of the past 6 years. Despite the fact that I told the other directors I am not happy being underpaid, they still have the cheek to pass me more and more work to do.

BartyBoy

getmore4less wrote: »

Did you go to the companies house web site as recommended previously and again above


https://beta.companieshouse.gov.uk

Checked the site once and will check it again as it seems there are a lot of paperwork to read. Thanks for pointing it out though!