Shares - I've no idea!

Sea_Shell

JJJ1985 said:

Thanks all.  I know how much was paid for the shares but not knowing what the businesses and shares are worth I don't know what percentage I own.  Where could I sell them.  1 owner said the shares are worthless.  1 owner said his business would go under if he had to buy me out

You've said there is no paperwork.   So what DO you have in the way of "proof" that these shares in these businesses exist?

Is it just the original payments made to them from your Grandad?    Is there anything to state what these payments were for?

However, I've just noticed you've said you have e-mails.   What exactly do these say?

Are they limited companies?

What did your Grandads will actually say?    "I leave my 10% share in Bob's Plumbing Ltd to my grandchild X" ?

What happens if "Bob's Plumbing" dispute that your Grandad ever owned a share...if you have no paperwork?

Sorry if this comes across as negative, but i'm not sure your inheritance is actually going to be worth much, if anything, if you can't prove it.   It only needs these businesses to seek their own legal advice, and the drawbridge could get pulled up very quickly.

Thrugelmir

How were the shares valued for probate purposes when your grandfather passed away?  Have the shares been transferred into your name? 

jimjames

Depending on the level of the shareholding it may be listed on Companies House with the significant shareholders of each company. But that depends on the overall % that each shareholder owns.

Steve182

I've had a quick look at companies house records for my own limited company, which is privately owned. 

You can find clues to approximate percentages owned by some major shareholders but nothing of minority shareholders.

As a ball park, if you sell a private company that makes a good steady profit year by year which is not growing you might expect a price of between 3x and 5x EBITDA.

In other words, it might be worth around 3 to 5 times its annual earnings.

There are many caveats though. Eg, some companies are worthless if the bloke that runs it sells up and leaves!

Companies that are growing and are likely to continue to grow are worth a lot more than those which are not.

The price is likely to be higher if an interested buyer comes along and really wants the company when you're not bothered about selling, so makes an attractive offer, as opposed to you just offering it on the marketplace when you are desperate to exit etc etc

maxsteam

I agree that you need to research what your grandad actually bought. If he bought shares, then there should somewhere be a record of how many shares he bought. If he made a loan, then again, something should be recorded. What do the emails say? Did your grandad ever receive any money back either as a dividend or repayment?

A good starting point might be to establish whether the money was a purchase of shares, a loan or a gift then review the Companies House records. There might be a record of the companies' accounts which will give you an idea about whether the companies are profitable or own assets.

You stated that "The companies are owned by his friends". If you are a shareholder, you also own part of the companies. It's important that you try to get on with your grandad's friends. I suspect that, without those people running the businesses, the companies will not be worth much.

If large amounts of money are involved, you might consider seeking professional legal advice. If it's just a couple of thousand pounds, you might ask for a discount next time you visit the business.

Jonesy1977

Not really enough information to help you here.  You are going to have to do some work to establish what exactly your "shareholding" is.  The first thing to check is whether you grandfather was in receipt of any dividends.  When a companies accounts are completed and assuming that there are profits a dividend will be voted and the shareholders will receive their share of the profits.   To make this complicated, you can have categorised shares for examples A shares could receive dividends and B shares may not.  When your grandfather made these investments he should have had a shareholders agreement, this would detail what happens on his death to his shareholding.  If this is not the case then it will be very difficult to agree a way forward without solicitors I am afraid.

Bacman

Is it worth contacting an equity company to see what they would pay for the business as it stands, then with that, and knowing the percentage of the company you "own", you could offer the other partners in the business the opportunity to buy you out, or otherwise close the business and release the assets to share out. You might find the other partners are doing the "we'll go bust" strategy to not pay you anything! If the business is worth money then they will buy you out and then keep the extra profit from their shares in the future, ie an investment.

Robert_McGeddon

Jonesy1977 said:

The first thing to check is whether you grandfather was in receipt of any dividends.

A good point. If indeed your Granddad was a shareholder - this doesn't seem absolutely proven.

As already posted the facts of ownership and valuation of shares/loans etc. should have been established for Probate purposes. Reading the post to date I don't have clarity as to what's held and how significant it is to the business(es).

In practical terms you should be aware that profits are extracted from a business by dividends or retained to achieve capital growth. Profits are stated after directors' remuneration. In small private companies the directors and shareholders are often one and the same so set their own remuneration. If you're a shareholder 'on the outside' of day-to-day management of the company(ies) you would have no say in the level of directors' remuneration - all profits could  go as remuneration leaving nothing to distribute as dividends. Your shareholdings would then be of little value.

I think more details would be helpful.

maxsteam

OP may have lost interest in the post. It's important to remember that these are not listed shares. If they are indeed shares in a company, they will probably confer voting rights on issues such as dividends and election of officers. A 49% stake can be worth a lot less than a 51% stake. There's no obligation on anyone to "buy them out". If it's a small business, there's little chance of a private equity buy-out. The only value is likely to come by working with the people running the businesses.

Thrugelmir

maxsteam said:

OP may have lost interest in the post. It's important to remember that these are not listed shares. If they are indeed shares in a company, they will probably confer voting rights on issues such as dividends and election of officers. A 49% stake can be worth a lot less than a 51% stake. There's no obligation on anyone to "buy them out". If it's a small business, there's little chance of a private equity buy-out. The only value is likely to come by working with the people running the businesses.

Normally there'll be a shareholders agreement to cover such eventualities and to stop the shares ending up in another party's hands.