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MenuHow might exit and equity for look for stakeholders?
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Next time, get this stuff figured out at the start and written down in your Operating Agreement. The OA tells everyone what the agreements are on how things like this will be done.
You may be able to do that now, but it's going to be more challenging to get to consensus today. You're pretty much guaranteed someone is going to be unhappy with the results and that's going to cause trouble.
Minority shareholders have rights. Learn what those are.
You need to talk to an attorney and an accountant now and get their "professional advice." I am neither of those and this is not "professional advice."
If your agreement contains some vesting period or vesting date, they will get their stake in equity on said date or period and on conditions prescribed in the agreement but if there are no specific vesting terms then they will get their equity share on grant date which is the date on which share in equity was granted. If you are looking for an answer to how your stakeholders will be compensated on exit then the answer is that they will be compensated on the maturity of deal as per the percentage of equity they hold in business.
Related Questions
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When looking to sell my company, how can I determine its value if it's service based and has no subscription model?
So you're saying that your business is a service business like auto repair, home buying, or any of millions of businesses that have existed for many many years. This is not a problem. Businesses like yours are bought and sold every day. The secret is a track record of profitable cash flow and a demonstrable system of how you get clients. If you want to run down a quick valuation just arrange a call and I'll show you in 15-30 minutes what kind of ballpark value your business may hold. Cheers David BarnettDavid C BarnettDC
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What is your recommended approach to selling a men's clothing ecommerce store?
Unless you have a decent traffic or hugely demanded items larger comps might no be interested. Access to market is what leads companies to buy one another. I rencently bought a commercial cleaning company and merged it with my residential one to create an improved service with my people but leveraging the other company's subscriptions. I would not buy based on services, but buy either access to data, people or market. So your approach can be based on that rather than pitching a retailer with zero margins. Finding companies to pitch to is harder than it sounds and it literally simply comes down to you picking up the phone as much as you can. Good luck!Humberto Valle Texas Real Estate Investor, Wholesaler, & Airbnb SuperhostHV
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How to sell a service based company?
YES! You certainly can sell a services business; and, if it is positioned and prepared properly, for pretty great returns too. There are a number of different exit strategies available to you, not ALL of them acquisition. For instance; we have helped service business owners transition (exit) from their business without selling the business, but instead by retaining a minority interest and receiving large (7 figure) royalty checks for years after their departure. That said, IF acquisition is what you want each of the dozens of strategies available to you really begin with identifying prospective buyers, understanding their motivation for acquisition and pivoting your company into alignment with those motivations. I explain the process in more detail here: http://www.zerolimitsventures.com/cadredc Hope this helps! Good luck. SteveStephan LittleSL
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How do you ensure you can access health insurance when you leave your job to begin your startup?
If you're in Canada, there are two options: - Some insurance companies will offer employee benefits coverage to companies with as few as 2 employees. - You can join an association plan (there are many out there), where you're part of a larger pool of many small companies and the claims & premiums are spread across the entire pool.Christopher GoryCG
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How do you discount value of common stock?
Hire an independent valuator. In the case of US companies, a 409A valuation has to occur at every priced financing round, so if you've had one done, that would serve as guide. But you might not even have the right to sell your shares. Your shares should be subjected to vesting and your voluntary resignation would likely cancel all remaining unvested shares. Even should you have shares to sell, if you have Preferred shareholders, it's likely that there are terms that might make selling your shares to a 3rd party difficult. Happy to talk in more detail about the specifics of your situation.Tom WilliamsTW
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