UK Advice needed asap!

[Tricky71]

I am a director of a small business and have a quarter shareholding. The majority share holder (MSH) wishes to retire next year and consequently has wanted to sell 10% of shares per year. I bought the first 10% and have been 'groomed' to continue buying into the practice. However, I found out a few months ago that the MSH has taken out his 'goodwill' following advice from our accountants without agreement of the remaining Directors / shareholders and hence has left us in quite a difficult position financially. This action has left me doubting the integrity of the MSH, the integrity of the accountants and the true health of the business.

I need some independent advice on the company accounts in order to evaluate my best course of action as currently I would happily resign as Director and go my separate way as respect and enthusiasm is at an all time low.

Can anyone advise how I would go about seeking independent financial advice which is not going to cost me thousands as it will be a personal funding?

Thank you for reading.

 

[ArcSine]

This is somewhat tangential to your question, but nonetheless important in the circumstances. While you're seeking an advisor, take some time--if you haven't already done so--to become very familiar with any shareholder agreements which might be in effect. In particular, study the buy-sell and share transfer provisions.

There are three key questions of importance in your situation, all three of which should be answered by those particular provisions of the shareholder agreement:

1. Are all of MSH's actions thus far--e.g., the extraction of goodwill you mention--in full compliance with the agreement?
2. What are the agreed-upon requirements and procedures for MSH selling his shares; e.g., with respect to valuation, qualified purchasers, first-refusal rights, etc.
3. Similarly, should you decide to sell your equity and put the company in your rear-view mirror, what procedures and restrictions apply?

These are all issues with which you'll want to develop a little expertise, in order to make optimal choices in this one. Even with an advisor at your elbow, being up to speed on these items will help you squeeze the most value from your consultant-fee costs.

One other thing to keep in mind in vetting potential advisors: Make sure he/she has some expertise with respect to valuation matters. Not all accountants do; it's not generally a subset of the day-to-day debits and credits stuff. But it's important in your situation for two reasons: You'll need to be able to assess the value of MSH's shares if you choose to remain and up your holdings, and you'll have to determine a reasonable price for your own equity if you decide to bail.

Best of luck with it!