Valuing shares in Ltd company

[starstruck]

How do I work out full market value of shares in my company? It has been around for > 10 yrs, has retained profit and existing clients. I'm investigating alloting some new shares, but understand they would need to be purchased at 'full market value' by the person concerned.

[northernladuk]

Wouldn't the value really depend on the person you are selling them to. You could argue a very wide range depending on the outcome you want. If it's to sell to family members/friends you could quite easily manipulate the numbers down. If it's to a genuine investor you've got a host of less tangible factors to boost the value.

Care to share the relationship first so we can give you a better answer based on circumstance?

[starstruck]

a

Wouldn't the value really depend on the person you are selling them to. You could argue a very wide range depending on the outcome you want. If it's to sell to family members/friends you could quite easily manipulate the numbers down. If it's to a genuine investor you've got a host of less tangible factors to boost the value.

Care to share the relationship first so we can give you a better answer based on circumstance?

It would be the family members/friends category. They would buy the shares with their own money at full market value and any dividends they receive would never make they way back to me.

[northernladuk]

a

It would be the family members/friends category. They would buy the shares with their own money at full market value and any dividends they receive would never make they way back to me.

Why would you give your hard earned money away? Tax fudge to get it to the kids cheaper? Look after the parents more tax efficiently?

[Old Greg]

How do I work out full market value of shares in my company? It has been around for > 10 yrs, has retained profit and existing clients. I'm investigating alloting some new shares, but understand they would need to be purchased at 'full market value' by the person concerned.

Are you a typical '1 man band' contractor Ltd, or is it bigger than that?

[northernladuk]

This is going to be a very long thread. A two line question to ask about an extremely complicated situation that is highly dependent on the details, of which there are non.

Always makes me think someone knows what they are trying to do is a no no when they hide so much information.

[starstruck]

Are you a typical '1 man band' contractor Ltd, or is it bigger than that?

It’s bigger than one man band. We have hundreds of clients and it doesn’t require me working to make money, I could in theory retire and it would still operate. I’m just after a way of coming up with a fair valuation of shares. I’ll ask my accountant also, but he’s on hols at moment. Thought there might be some industry standard multiple of earnings or something.

[malvolio]

It’s bigger than one man band. We have hundreds of clients and it doesn’t require me working to make money, I could in theory retire and it would still operate. I’m just after a way of coming up with a fair valuation of shares. I’ll ask my accountant also, but he’s on hols at moment. Thought there might be some industry standard multiple of earnings or something.

You need to talk to someone who buys and sells businesses for a living. I know a guy, now retired, who may be able to help. Drop me a PM if you're interested.

[Old Greg]

It’s bigger than one man band. We have hundreds of clients and it doesn’t require me working to make money, I could in theory retire and it would still operate. I’m just after a way of coming up with a fair valuation of shares. I’ll ask my accountant also, but he’s on hols at moment. Thought there might be some industry standard multiple of earnings or something.

Most of us are 1 man band Ltds here, but a few people have expanded and may be able to help - but probably this isn't the right forum for question.

[Lance]

It’s bigger than one man band. We have hundreds of clients and it doesn’t require me working to make money, I could in theory retire and it would still operate. I’m just after a way of coming up with a fair valuation of shares. I’ll ask my accountant also, but he’s on hols at moment. Thought there might be some industry standard multiple of earnings or something.

you could value it as cash in the bank. If you're the revenue generator and plan on stopping then cash in the bank is a very fair valuation.
Are the people you're selling shares to going to be working in the business? If so then I suggest you seek legal advice and get some proper contracts drawn up, including 'what to do if someone dies, what to do if you fall out, what to do if the company goes bust, etc. etc.