Joining Ltd Company as 50% Shareholder

M

msoptimistic

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Hi all

I wonder if someone can tell me what we should do in this situation.

We have been offered 50% of a company which income stream is royalty/license fee. This company is a limited company and not listed. It has 2 shareholders who owns 50% of the company each. We are very interested in becoming 50% shareholder.

One of the shareholders wants to retire and if we want to take over, what are the steps to take?

I am more interested in the financial side of things if someone can advise.

Thanks.

MsOp
 
Are you happy with the price of the shareholding? Do you intend to have any due diligence carried out? The company might already have an accountancy firm hired but I would advise going to a separate, independent firm to carry this out. Just be sure that the shares are worth what you're paying for them.
 
50/50 shareholdings can result in a deadlock. It would be better if one shareholder had 51% (or 50.01%).
 
" agree, 50/50 can be nightmare!"

Had the opposite problem, was a minority shareholder in 2 director company, and had to resign as the major shareholder was running away with themselves and was making - in my opion - bad accounting decisions and was not willing to listen to advice, I still have my original shares as the Director who replaced me did not buy my shares
 
Hi all

We have not even gone that far as to look into the price of the shareholding.

1) How do we ascertain that?

2) The fella (Shareholder A) whom we would be replacing is actually not looking at making a profit out of us. He said if he could, he would sign the shares over to us for nothing! (he is actually not involved in the running of the company. His name was used as a director by Shareholder B. If you know what I mean. So it is shareholder B who suggested we replace him. Shareholder A has no problem giving it up at all for nothing. Is that possible?

We know this crowd well and in fact for a long time. Decent and legal in every aspect. And I have seen their accounts. Looks clean and proper. No unusual items on books.

Any advice on how we can minimise the price we have to pay to buy over this 50% shareholding? (bearing in mind Shareholder A does not want a penny from us in the first place!)

Thanks all

MsOp
 
Talk to a good accountant. AFAIK there would be BIK issues if the shares were sold for below the market rate (with Revenue deciding what the market rate is) but I am open to correction.
 
there are various ways to value the cost a company share.
1-net assets basis
2-% of gross profit, by a no of yrs etc
3-% of net profit by a no of yrs etc
4-% of sales by a no of yrs etc
5-present value of future cash flows

even if you get the shares for zilt the revenue wont accept this as the shareholder B disposed of a interest in a company and will come up with a figure for the sales proceeds.
 
msoptimistic said:
2) The fella (Shareholder A) whom we would be replacing is actually not looking at making a profit out of us. He said if he could, he would sign the shares over to us for nothing! (he is actually not involved in the running of the company. His name was used as a director by Shareholder B. If you know what I mean. So it is shareholder B who suggested we replace him. Shareholder A has no problem giving it up at all for nothing. Is that possible?
Click to expand...
Possible, yes, but also very unusual. If he were to sign them over for nothing, he would be giving you a substantial gift (the current value of the future income stream).

Are you sure that there is no hidden agenda here? If you will be appointed a director, you have certain specific legal responsibilities. Are you certain that your partner will be a good partner?
 
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