Selling shares in private limited company

Discussion in 'General Business Forum' started by julesbrad, Mar 9, 2007.

  1. julesbrad

    julesbrad UKBF Newcomer Free Member

    Posts: 164 Likes: 18
    Has anyone had experience of selling shares in a private limited company ?

    I have invested in a private limited company and would like to know what are the different options for when I need to look at exit strategies ? Are there any sites where people buy and sell stakes in private limited companies ?

    Thanks for any info
    Posted: Mar 9, 2007 By: julesbrad Member since: Dec 27, 2006
    #1
  2. DuaneJackson

    DuaneJackson UKBF Legend Full Member

    Posts: 9,511 Likes: 1,004

    Not as far as I know. That's the nature of private comapny shares - they are very hard to sell on as they're not publically traded.

    Your exit is going to depend very much on where the company is going. If you only hold a small % and don't have much if any say in the day to day running of the company, then you're not going to have much influence on what your exit may be.
    Posted: Mar 9, 2007 By: DuaneJackson Member since: Jul 14, 2005
    #2
  3. julesbrad

    julesbrad UKBF Newcomer Free Member

    Posts: 164 Likes: 18
    I do have quite a large % share and am looking to recoup my investment as dividends within 12-18 months but I was looking for somewhere where people may sell or buy shares from shareholders in private limited companies. They can not be traded publically (as you say, the nature of the business is that it is a 'private' limited company) but, can shareholders publically advertise their shareholdings for sale ?

    Could this be a business opportunity for someone to set-up a web site where shareholders can buy and sell their holdings in private limited companies ? :|
    Posted: Mar 9, 2007 By: julesbrad Member since: Dec 27, 2006
    #3
  4. DuaneJackson

    DuaneJackson UKBF Legend Full Member

    Posts: 9,511 Likes: 1,004
    I'm no expert, but I'm pretty sure they can, yes. Unless ofcourse there is a shareholders agreement in place that forbids it.

    For some of the private shares I've bought and also for some I've sold in my own companies, there is an agreement in place that the other shareholders would have first right to buy any shares being sold by another shareholder.
    Posted: Mar 9, 2007 By: DuaneJackson Member since: Jul 14, 2005
    #4
  5. bwglaw

    bwglaw UKBF Newcomer Free Member

    Posts: 4,682 Likes: 230
    the company's articles will state how the shares are transferred. Often existing shareholders will ensure they have first refusal of any shares being sold. If you have a shareholders agreement you will need to refer to that as well.
    Posted: Mar 9, 2007 By: bwglaw Member since: Apr 8, 2005
    #5
  6. julesbrad

    julesbrad UKBF Newcomer Free Member

    Posts: 164 Likes: 18
    Thanks for your responses.

    I understand that the shares have to be initially offered to existing shareholders
    but
    if I offer to exist shareholders for £100,000 (please note, example figures only ;) ) and they do not want to pay that figure, but I think I can sell them to someone else for this figure, can I do this is there is no specific agreement which forbids the sale ?

    second question :-
    Is this an area where I can set-up a web site as an intermediary between the buyers and sellers of private limited comapny shares ?
    Posted: Mar 9, 2007 By: julesbrad Member since: Dec 27, 2006
    #6
  7. khannan

    khannan UKBF Newcomer Free Member

    Posts: 5 Likes: 0
    Please excuse my ignorance and butting in n your conversation but it seems you are very wise in this area. (and I new to this site and how to post a new enquiry?) I currently run a ltd company and an investor has approached me to invest some capital to help the business expand and employ another invidividual. He has asked for 25-30% shares and Im confused what implications this could have later in life if I except? Can anyone help advise please?
    Posted: Aug 29, 2007 By: khannan Member since: Aug 28, 2007
    #7
  8. Matt Quinn

    Matt Quinn UKBF Newcomer Free Member

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    Lets see.... 15 + posts in as many minutes... ALL with the same text!

    You wouldn’t be here just to spam us would you?

    What snake oils is it you’re flogging? Don’t bother!
    Posted: Aug 29, 2007 By: Matt Quinn Member since: Aug 5, 2007
    #8
  9. julesbrad

    julesbrad UKBF Newcomer Free Member

    Posts: 164 Likes: 18
    I would definitely advise seeking the advice of an accountant on this matter. What do you value your business at ? Would the amount of investment be worth 25-30% of your business ? Has an investor just approached you out of the blue ?

    I am also just starting to look for an investor for Toyk Design
    Posted: Aug 29, 2007 By: julesbrad Member since: Dec 27, 2006
    #9
  10. khannan

    khannan UKBF Newcomer Free Member

    Posts: 5 Likes: 0
    No, He hasnt approached me out of the blue. He is an ex-colleague and client. Has seen thingsa from the other side and referred many a client and feels it soon will be a very succesful business. I really dont know and wouldnt know how to value my business? I am currently only a one man band. (mortgage broker) and turnover this year looks around 60-70k and with little overheads. He is looking at helping invest in better premises and another adviser to expand further which is where I really need to go from here.
    Posted: Aug 29, 2007 By: khannan Member since: Aug 28, 2007
    #10
  11. khannan

    khannan UKBF Newcomer Free Member

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    Sorry Im confused with this message? this is my second attempted post before replying to you and the kind person below?
    Posted: Aug 29, 2007 By: khannan Member since: Aug 28, 2007
    #11
  12. Redbaron

    Redbaron UKBF Newcomer Free Member

    Posts: 145 Likes: 1
    Hi Khannan

    Any one buying shares in your Company who have and own over 25% has certain rights that could cause you problems later on if they wanted to, such as you increase the share capital of the Company.

    This is something you need to bear in mind, so you would be best to consult a professional, there is a saying "look before you leap" better be safe than sorry later on.

    Regards

    Redbaron
    Posted: Aug 29, 2007 By: Redbaron Member since: Aug 24, 2007
    #12
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  13. Mr Wise

    Mr Wise UKBF Newcomer Free Member

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    ..replying to the original poster...

    i would try selling your stake back to the other share holders - as they may wish to buy shares in their own company if they deem it of value.

    if theres more than 1 other share holder - it might be possible to let them bid it out - highest bidder wins.

    else - you will have to try and sell them to another investor...you can do this by advertising it.

    or maybe approach one of these "companies" that buys out other companies

    all the above depends on any agreement you may have signed, etc

    Matt
    Posted: Aug 29, 2007 By: Mr Wise Member since: Aug 26, 2007
    #13
  14. khannan

    khannan UKBF Newcomer Free Member

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    Thank you very much for your kind assistance.
    Posted: Aug 31, 2007 By: khannan Member since: Aug 28, 2007
    #14
  15. stugster

    stugster UKBF Newcomer Free Member

    Posts: 9,294 Likes: 2,061
    Matt's post was not directed to you, but a spammer who's post was removed from this topic.

    Just ignore him :) He hasn't taken his Prozac.
    Posted: Aug 31, 2007 By: stugster Member since: Feb 1, 2007
    #15
  16. DavidT

    DavidT UKBF Newcomer Free Member

    Posts: 914 Likes: 113
    Khannan

    It would be good to seek professional advice on it... so they can really assess your situation and value of your business.

    A good position to be in though, someone that has so far been a positive to your business wanting to buy a part of it and build it up. better to have 70% of a £150K business than 100% of a £75K business (of course in simple terms).

    Be prepared to negotiate a little, as well as make sure you are both clear on decision making and how it is done, dispute handling... all the things partners/shareholders need to be sure of first.

    Interested to hear how it goes for you.
    Posted: Aug 31, 2007 By: DavidT Member since: Aug 16, 2007
    #16
  17. PRD

    PRD UKBF Newcomer Free Member

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    A question that I also have that I cannot see any responses too.... If an up to date valuation has been carried out, and the share price value is now £5 (example), but only £1 is being offered (because they know money is needed urgently) - is there an intermedary that can dictate what should be paid?, or how can influence be brought to bear without having to rely on their "human spirit"? In my case, I have an interested 3rd party that wants to buy the shares.
    Posted: Mar 17, 2008 By: PRD Member since: Mar 15, 2008
    #17
  18. Shahkti

    Shahkti UKBF Newcomer Free Member

    Posts: 21 Likes: 5
    I think you got the answer. It will be covered (probably) either in the company articles or in a shareholder agreement.

    One or both of these (probably) state that selling shares in the private company requires the approval of the company.

    If they want you to sell to a 3rd party they will say yes. If not...

    The reason why there isn't a brokerage to do this is probably because every transaction would require company's approval, where selling shares listed on AIM or LSE doesn't. I guess.
    Posted: Mar 17, 2008 By: Shahkti Member since: Mar 13, 2008
    #18
  19. Jai Batra

    Jai Batra Guest

    Posts: 1 Likes: 0
    I am interested to learn more about buying shares in a private limited company. Someone I know is a director of a private limited company and owns one third shares (50 out of 150). There are two other share holders and they are also appointed as directors. As far as I know there is no share holders agreement and I haven't yet seen the Constitution and Article of the company.
    The share value was assessed by a professional company and the other two directors are offering a much lower price.
    The company's current turnover is very good and is quite profitable.
    I am willing to buy the shares somewhat between the current offer and market value. I need to know:
    1) What rights would I have as a share owner in relation to the daily management and running of the company.
    2) Can I ask for information on daily accounts etc and object to certain expenditures etc.
    3) Can I ask to be appointed as one of the directors of the company and ask for a shareholder's agreement
    4) How can I protect my divident and investment
    5) Can the shares be sold to me even though the other two directors may not agree.
    6) I am also a director of another company. Can I company buy these shares as an investment.
    I would really appreciate a reply.
    Posted: Mar 25, 2009 By: Jai Batra Member since: Mar 25, 2009
    #19
  20. Alsimon

    Alsimon UKBF Newcomer Free Member

    Posts: 1 Likes: 1
    I would always recommend talking to your accountant and another professional.

    If a shareholder has 26% or more of your company there are restrictions on what you can do without consulting them; like selling it: And there maybe more.

    I agree with Felix Denis when he says "never sell more than 49%" - always keep control or you could be out of a job and the business you built. Unless that is what you want of course ;)

    Good luck
    Posted: Oct 18, 2011 By: Alsimon Member since: Oct 18, 2011
    #20
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