Taking shares in a new business as part payment for services
Discussion
Hi all - bit of advice from those far more qualified, please! 
Situation:
There's an existing company, been around 5 years. Has had a lot of investment from it's main director of his own personal funds over this period to get it where it is. It's currently running at a small loss (but has had a ~£1m investment to date from him to get it to this point). 1 other full time employee besides him, but makes use of a reasonable amount of contract resource as required for work undertaken.
I was requested to provide them with a new offering they can take to market - something they've been planning and designing throughout this period - to change the company completely into something a LOT bigger and more profitable. I have done this for a cash amount, and have no issues with that. I'd pitch their odds at achieving a decent level of profit and growth now at 50:50, and largely down to the quality of the marketing and how quickly competition emerges (it's a new concept - and one with appeal).
They want to make use of my skills going forward - both for delivering specific things and consultancy. The current offer that we're both happily stands at a reduced day rate than I'd normally look at, plus 2.5% of the company. As I say, we're all happy with these numbers - I'll still get paid for the hours at a figure I'm willing to accept, and they'll get what they need at a price they're happy with (having burned through most of the capital investment available).
The plan is to set up a new company to launch this through for a number of reasons, with the shareholding coming from that, clients being invoiced from that, and so on and so on.
Question:
There's a good chance the shares'll be worthless. But should they become valuable, I want to make sure I've done anything necessary to make sure that value remains mine and there are no fall-outs! Is there anything anyone can think of that I need to make sure goes into the shareholders agreement, etc?
Obviously, having sight of the accounts. Preferably having sign-off on them (although at that level of shareholding, I can see that could be pushing it). Some clause for the value at which I could sell my shareholding back, and the points at which I could do this? Anything else? Worth pushing to be a director of the company for any reason?
Cheers, all - thanks via beers at BTaP/anywhere in Cheshire/London, naturally.
Situation:
There's an existing company, been around 5 years. Has had a lot of investment from it's main director of his own personal funds over this period to get it where it is. It's currently running at a small loss (but has had a ~£1m investment to date from him to get it to this point). 1 other full time employee besides him, but makes use of a reasonable amount of contract resource as required for work undertaken.
I was requested to provide them with a new offering they can take to market - something they've been planning and designing throughout this period - to change the company completely into something a LOT bigger and more profitable. I have done this for a cash amount, and have no issues with that. I'd pitch their odds at achieving a decent level of profit and growth now at 50:50, and largely down to the quality of the marketing and how quickly competition emerges (it's a new concept - and one with appeal).
They want to make use of my skills going forward - both for delivering specific things and consultancy. The current offer that we're both happily stands at a reduced day rate than I'd normally look at, plus 2.5% of the company. As I say, we're all happy with these numbers - I'll still get paid for the hours at a figure I'm willing to accept, and they'll get what they need at a price they're happy with (having burned through most of the capital investment available).
The plan is to set up a new company to launch this through for a number of reasons, with the shareholding coming from that, clients being invoiced from that, and so on and so on.
Question:
There's a good chance the shares'll be worthless. But should they become valuable, I want to make sure I've done anything necessary to make sure that value remains mine and there are no fall-outs! Is there anything anyone can think of that I need to make sure goes into the shareholders agreement, etc?
Obviously, having sight of the accounts. Preferably having sign-off on them (although at that level of shareholding, I can see that could be pushing it). Some clause for the value at which I could sell my shareholding back, and the points at which I could do this? Anything else? Worth pushing to be a director of the company for any reason?
Cheers, all - thanks via beers at BTaP/anywhere in Cheshire/London, naturally.
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