How to value shareholding

I am a minority shareholder in a private limited company. The majority shareholders wish to purchase my shares.
Can anyone advise on how to put a monetary value on my shareholding?

Hi

A lot will depend on the percentage of share holding that you hold in the company. If your shareholding in concert with another shareholder gives control of the company then your share holding could be very valuable indeed. For example if the company's shares were split three ways and you each held a third then even though you were a minority you would hold the balance of power and your third woudl be very valuable.

However if there were just say two shareholders and the other had two thirds of the company your shareholding would be worthless as you would never be able to initiate anything in the company, not be able force the declaration of a dividend etc.

You may be entitled to a share of the net assets on the winding up of the company so a percentage of the net assets of the company based on your percentage shareholding would be the best estimate of the value.

My shareholding is too small to affect the balance of power in the company.
I was thinking more on the lines of the value of the shareholding as a percentage of the value of the company (say in the event of a trade sale) not just its net assets.
I know there are a lot of factors which influence the value and that these vary so I was just looking for some general pointers.

This is a common problem for private companies. The only way to get a solid-ish valuation is to have the auditors do it. It will be based on revenue, profit, balance sheet, projected growth etc. I think there's some sort of formula that they use (companies often ask them to do it in order to value share options). From your own perspective, if you do get a valuation and agree to sell, try to exclude the "minority" nature of your holding as a valuation factor for your shares and base it on a straight-line proportion basis.

If there has been recent investment in the company or if share options have been granted recently (and valued), then that will be a good starting point. If neither has happened recently, then I think you'll need the auditors involved.