Leinsterguy
Registered User
- Messages
- 5
If you're getting 10% for free, you'll have to get that valued, because you may have to pay tax on it. So there is a cash cost.Plan is to come in, get 10% at no cost in cash terms
This is spot on. Shareholders agreements can be painful to put in place, especially for a novice, but essential as explained above. If you need the 40% guy in for two years the SHA is the place to agree it, and any option or first refusal too.I would treat with extreme caution. Fundamentally, a minority shareholding in a private limited company has little or no value in the absence of shareholder and/or other agreements in place, and even then, it’s hard to cover yourself for all eventualities. I’m not suggesting that anyone is out to do you out of anything, but things happen, and the lack of a market for minority stakes in companies has a real impact.
I would treat shares given for free as something like a lottery ticket with better (but still not great) odds: they may realise some value at some point in the future, but there’s every chance they won’t.
First question if I’m putting real cash in (as I understand it, you’d be facilitating another shareholder to cash-out at some point?) is how can I get my money back? What has to happen for me to make a return?
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