Selling my shares in a Private Limited Co

Discussion in 'General Business Forum' started by leon1969, Feb 20, 2013.

  1. leon1969

    leon1969 UKBF Newcomer Free Member

    Posts: 6 Likes: 0
    I'm a founder member of a company and own a 30% share. I'm currently a director but I'm looking to sell my shares and resign. This has been mutually agreed but the other directors/shareholders have offered what I consider a derisory amount for the shares. The company has no shareholders agreement and used the standard model of articles. I would like to know if I can sell the shares to another party as from what I can see the other directors could block this and leave me in limbo. Can anyone help?
    Posted: Feb 20, 2013 By: leon1969 Member since: Jan 30, 2013
    #1
  2. Business News

    Business News UKBF Contributor Free Member

    Posts: 540 Likes: 91
    You shares are worth 30% of the balance sheet net worth for the business, which is the theoretical sum that would be available if all tangible assets were cashed in. So you should expect this as a minimum but anything over this will be a bonus.
    Posted: Feb 20, 2013 By: Business News Member since: Feb 2, 2009
    #2
  3. leon1969

    leon1969 UKBF Newcomer Free Member

    Posts: 6 Likes: 0
    Ive had a valuation of the company its just that they are offering well short of this, I would just like to know if they can block the sale to another party with there being no shareholders agreement.
    Posted: Feb 20, 2013 By: leon1969 Member since: Jan 30, 2013
    #3
  4. David Griffiths

    David Griffiths UKBF Regular Moderator

    Posts: 10,190 Likes: 3,241
    That will depend on the company's Articles.

    Do you actually have a buyer lined up? I think that it will be very hard to find somebody to buy a minority stake in a private company with no ready market for the shares. Most people wouldn't touch it with a bargepole.

    And in terms of valuation, a 30% stake is worth much much less than 30% of the balance sheet value of assets because there is no control and there might be nobody to sell the shares to in future. In fact most shareholdings are valued on earnings rather than asset value, the earnngs being adjusted to take out non commercial aspects like low shareholder salaries.

    If you don't have a shareholders agreement, then you'll have to live with the consequences.
    Posted: Feb 20, 2013 By: David Griffiths Member since: Jun 21, 2008
    #4
  5. leon1969

    leon1969 UKBF Newcomer Free Member

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    There is a possible buyer who knows the company well. The company is s software company with the software being its only major asset. The company has many contracts that are running over a number of years so its future success is guaranteed. The issue I have is can the other directors block the sale?
    Posted: Feb 20, 2013 By: leon1969 Member since: Jan 30, 2013
    #5
  6. David Griffiths

    David Griffiths UKBF Regular Moderator

    Posts: 10,190 Likes: 3,241
    . .
    Posted: Feb 21, 2013 By: David Griffiths Member since: Jun 21, 2008
    #6
  7. Talay

    Talay UKBF Contributor Free Member

    Posts: 2,967 Likes: 649
    I'm off to visit a prospective business purchase next week where the owners think the £100k profit deserves a high valuation when in reality, after adding back the value of their inputs as effective true salaries, the business is far less profitable.

    Try to work out how your input is required by the company and also how much you are remunerated by dividends when replacing you with an employee would require a salary, car, benefits package etc. Roll those figures back into the accounts and add the same for any other working owner directors and you get near to some real profitability.

    Remember, many small businesses are essentially just jobs for the owners. Prices for such as a factorial of the income without tangible assets.
    Posted: Feb 21, 2013 By: Talay Member since: Mar 12, 2012
    #7