Is It As Complicated As It Seems?

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T

Tiggy

  • #1
    I just read this - typical scenario I know -

    ' the managing director is Miss X. The company is owned by its management and staff'

    But how is this worked out in terms sharing out % profit?

    So Miss X starts the company but needs employees with the right skills and also investors. So does she advertise for people who can give both?

    If Miss X always makes sure she owns 51% share does that mean that the % profit for other people is agreed between them or is it automatically tied into how much they invest?

    It all seems incredibly confusing :? :? :?
     
    Alpha

    Alpha

    Free Member
    Feb 16, 2004
    3,192
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    West Midlands
  • #2
    Its not that complicated,but can be made more complicated with many different scenarios.

    For a basic limited Company

    The company is owned by the shareholders in proportion to the number of shares that they hold irrespective of how much they paid for each share.


    The shares entitle the owner to not only that proportion of profits but also the same proportion of the total value of the company including all assets and liabilities.
     
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    T

    Tiggy

  • #3
    Thanks Alpha.

    So if I were to follow this model how on earth would I start? Sometimes I wonder if I have the head for all of this!!


    Is this structure, the company owned by management and staff, called anything specific so I can read more about it on the net?


    I like the idea but I woudn't know how to even start a discussion like this with an interested third party or how to strike a deal re % ownership re what is fair and what is not!!

    I am extremely keen to learn but feeling hopelessly inadequate at the moment. I'm quite an intelligent person but organisational skills are not my forte.
    :cry:
     
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    Ozzy

    Ozzy

    Founder of UKBF
    UKBF Staff
    • Feb 9, 2003
    8,409
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    3,519
    Northampton, UK
    bdgroup.co.uk
  • #4
    Hi Tiggy,
    I would be causious about giving up equity in the company so easily. You can still work a profit share scheme without giving away equity in the business.

    You can, by all means, offer an incentive of equity for the right person on a X year contract with certain terms tied into it, such as the person must stay with the company for X years or they lose the shares.

    I have setup profit share schemes (bonus schemes) with another company I worked with, and am considering it as an option for Quick also. As a policy its something I am all for as it rewards the staff for the work they do and they share in the success of the business.
     
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