Private Company Shareholder Q

[Rich]

Hi,

If A,B,C, and D start up a business, each with 100 shares @£1, and the
business goes on to be a huge success with a net worth of, say £1m....

If A wishes to sell his share to the others, how is a fair price determined,
or does A simply get his £100 back ?

RIch

 

[Tiddy Ogg]

Hi,

If A,B,C, and D start up a business, each with 100 shares @£1, and the
business goes on to be a huge success with a net worth of, say £1m....

If A wishes to sell his share to the others, how is a fair price determined,
or does A simply get his £100 back ?

RIch

He's the owner of a quarter of the business, therefore should get a
quarter of the value, ie 250k.
But if no-one among the others wants to pay this much, and he can't
flog it to anyone else, he'll either have to hang on to the share or
accept what anyone offers.

Tiddy Ogg.
http://www.tiddyogg.co.uk

 

[Ronald Raygun]

He's the owner of a quarter of the business, therefore should get a
quarter of the value, ie 250k.
But if no-one among the others wants to pay this much, and he can't
flog it to anyone else, he'll either have to hang on to the share or
accept what anyone offers.

Quite, and it's as well to note that "he can't flog it to anyone else"
might not only mean that he can't find an interested buyer, but it
could mean that the rules of the company prevent him from selling the
shares to someone else without the approval of the other shareholders.