L
little sme
Guest
Hi,
I have a reallly tricky problem. I and a friend set up a business nearly a decade ago, and we both had 50% of shares. He left the company a year and a half in because it wasn't going well. We weren't making any money, and he needed a fresh start. Unfortunately we never sorted out the shareholding issue, and I ploughed on into the business, with three other colleagues. I was young, and hadn't a clue about business.
The company's fortunes improved immediately after he left, and it's been pottering along for years now. Turnover of circa 3 to 400,000, but not huge outgoings either, so that we've mostly been just about breaking even. We made net profits of circa 100k in 2007, circa 6k in 2008, and a loss of 33k in 2009. We expect a similar loss for 2010. However we didn't pull in a lot of our earlier profits - like a lot of businesses, a lot of our turnover turned into bad debts. I guess what's kept us going was eventually redeeming some of our 2007 profits.
Anyway, we're having real problems planning ahead because of this shareholder issue. I feel like my three colleagues, who've stuck with the business with me for the guts of a decade, should be entitled to shareholdings of 20% each - maybe even 25%. It's difficult to motivate us all, given this uncertainty. Why should they work to make the business a success, just to increase his (and my) 50% stakes when they have nothing other than a mediocre wage?
I think my original business partner will be reasonable about this - he may wish to retain a small shareholding, or to sell all of his shares to my colleagues, which I think would give us a fresh start. I've no idea what would be a fair amount to pay him. The company's got a good name, loyal clients, but virtually no fixed assets. A few 6k worth of computers etc, if that.
Has anyone any idea what we could do? Is it a question of valuing the company (and my other shareholder agreeing to the value) and my colleagues buying him out? Could this be done by the company paying what would be part of their wages to him?
Any idea what the company's worth as it stands?
Any advice would be greatly appreciated.
Cheers
I have a reallly tricky problem. I and a friend set up a business nearly a decade ago, and we both had 50% of shares. He left the company a year and a half in because it wasn't going well. We weren't making any money, and he needed a fresh start. Unfortunately we never sorted out the shareholding issue, and I ploughed on into the business, with three other colleagues. I was young, and hadn't a clue about business.
The company's fortunes improved immediately after he left, and it's been pottering along for years now. Turnover of circa 3 to 400,000, but not huge outgoings either, so that we've mostly been just about breaking even. We made net profits of circa 100k in 2007, circa 6k in 2008, and a loss of 33k in 2009. We expect a similar loss for 2010. However we didn't pull in a lot of our earlier profits - like a lot of businesses, a lot of our turnover turned into bad debts. I guess what's kept us going was eventually redeeming some of our 2007 profits.
Anyway, we're having real problems planning ahead because of this shareholder issue. I feel like my three colleagues, who've stuck with the business with me for the guts of a decade, should be entitled to shareholdings of 20% each - maybe even 25%. It's difficult to motivate us all, given this uncertainty. Why should they work to make the business a success, just to increase his (and my) 50% stakes when they have nothing other than a mediocre wage?
I think my original business partner will be reasonable about this - he may wish to retain a small shareholding, or to sell all of his shares to my colleagues, which I think would give us a fresh start. I've no idea what would be a fair amount to pay him. The company's got a good name, loyal clients, but virtually no fixed assets. A few 6k worth of computers etc, if that.
Has anyone any idea what we could do? Is it a question of valuing the company (and my other shareholder agreeing to the value) and my colleagues buying him out? Could this be done by the company paying what would be part of their wages to him?
Any idea what the company's worth as it stands?
Any advice would be greatly appreciated.
Cheers