Business Startup and buying out shareholders.
Business Startup and buying out shareholders.
Author
Discussion

Misterv

Original Poster:

72 posts

147 months

Saturday 10th February 2018
quotequote all
Good evening PH. Ive lurked in the business section for a while, ever since i got my company off the ground.

We began trading on the 1st of October 2017 and have nearly hit a 6digit turnover B2B.
We are relatively small company at the moment, with the winter being our quietest month, although with the right marketing in the right areas, we should achieve a sustainable, high growth this year with a view to keep on expanding.

Any advice regarding start ups, i would be keen to hear.

We are now in a position to buy out a shareholder, but would like some advice regarding certain wording within the contract, i need to make sure i have covered all bases as the investor came in by supplying equipment rather than a 'buy in'

initially i was quite naive, and we didnt really get the correct paperwork in place to clarify who owned what.
anything i need to make sure i 100% cover within the buy out paperwork?
thanks PH


akirk

5,778 posts

144 months

Saturday 10th February 2018
quotequote all
if you want advice on wording you might need to share the wording smile rather difficult for us to advise on mysterious wording!

assume it is a ltd. company? if so, then you own whatever the shares say...
if not a ltd company, then we need to see the agreement wording - or take it to a solicitor...

Misterrd

Original Poster:

72 posts

147 months

Saturday 10th February 2018
quotequote all
Sorry to be vague, i don't want to give to many details out regarding the business smile

as for wording, im sorry i didnt make it clear enough, i was hoping someone maybe be able to suggest some 'standardised' items that should be included when buying out minority sharholders.

Jockman

18,414 posts

190 months

Saturday 10th February 2018
quotequote all
What does the Shareholder Agreement say? I think I know the answer.

ymwoods

2,194 posts

207 months

Saturday 10th February 2018
quotequote all
To be honest, you are going to be best off checking with your accountant what needs to be transferred and then also seeing a solicitor. I have done this in the past with a business however all setups will be different and one lot of wording will not cover someone else.

Whilst I could give you some sort of advice on wording, I don't want to just in case it is wrong and I would not want to put your business at risk. As I have found out to my Peril in previous ventures, it is always a good idea to get a professional to check things and make sure they are water tight. It could save you a hell of a lot of money in the long run. I have lost a great deal of money in the past from not doing concrete contracts with people who I considered friends. As soon as they saw the chance to run off with the money, they did.

anonymous-user

84 months

Sunday 11th February 2018
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Th articles/shareholder agreement (if there is one, there might not be) should determine the mechanism. Within that you need to negotiate with the other shareholder over how much of their holding they're going to sell and agree a price. If you can't agree a price, you may need to pay an accountant to value the business.

If you think the business has legs and this buyout is important to you, you ought to have a solicitor draft the sale agreement, stock transfer forms and share certs. I appreciate the last bits you can do yourself, but you might prefer the comfort of the solicitor carrying responsibility for more of the sale process. Unless there are knobbly bits to this that you haven't mentioned, it's all pretty straightforward stuff for a commercial solicitor.

Eric Mc

125,770 posts

295 months

Sunday 11th February 2018
quotequote all
Misterrd said:
Sorry to be vague, i don't want to give to many details out regarding the business smile

as for wording, im sorry i didnt make it clear enough, i was hoping someone maybe be able to suggest some 'standardised' items that should be included when buying out minority sharholders.
It's hard to give advice on a forum - especially when the poster is reluctant to give necessary details.

I would expect you must have professional advisers already in place - such as accountants and solicitors.

Are you planning on talking to them?

Misterrd

Original Poster:

72 posts

147 months

Sunday 11th February 2018
quotequote all
Sorry about the delayed reply, typical sunday funday with the family.

As for commercial solicitors, we dont have one of those, although we are in touch with a very good business advisor, i will approach him monday morning.

The business certainly does have legs, and has excellent growth potential.

The Initial investor will be bought out altogether, and we have already put a value on the shares he has within the company.

My main question really was if there was anything in particular i needed to look out for, although the advice regarding seems the obvious answer, and one i will put to my business advisor tomorrow for recomendations.

i understand i am vague, i dont want PH mods thinking i am trying to promote my business, nor do i want to delve to much into details on a public forum, i hope you understand, although if there is anything you would like to know about me, and the products i can offer within the building sector, feel free to pm me smile




Beetnik

578 posts

214 months

Sunday 11th February 2018
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1. Stock Transfer Form.
2. Assignment of any monies due (if appropriate).
3. Letter of resignation as director (if he/she is) and confirmation that he/she has no outstanding claims against the company.

singlecoil

35,834 posts

276 months

Monday 12th February 2018
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Misterv said:
Good evening PH. Ive lurked in the business section for a while, ever since i got my company off the ground.

We began trading on the 1st of October 2017 and have nearly hit a 6digit turnover B2B.
We are relatively small company at the moment, with the winter being our quietest month, although with the right marketing in the right areas, we should achieve a sustainable, high growth this year with a view to keep on expanding.
Hopefully you are making some profit too.

StevieBee

15,414 posts

285 months

Monday 12th February 2018
quotequote all
Jockman said:
What does the Shareholder Agreement say? I think I know the answer.
I was thinking the same thing. The lack of clearly written agreements and similar seem to be a common feature on these pages.

OP: Does the shareholder know you are looking to buy him out? Was this anticipated? If so, your path should be reasonably painless as you can open negotiations directly with them to flesh out the deal, principal to which will be two things; establishing the ownership of the equipment they provided will fall to the company and the money that will satisfy both parties to conclude the deal.

If the shareholder is not expecting this, then things may become a little trickier but again, the best approach is to start with a face to face chat.

On both counts, you really do need a good Solicitor with a credible corporate service.