bought out fellow 50% shareholder when that relationship broke down (for $140k) and
brought in new potential investor ?on trial? for one year. Provided that new investor met specific financial KPI’S (linked to his sales) our client granted him a put option to buy 50% of shares at a pre-agreed price (i.e. calculated before the increased sales – $1.2m). Pre-agreed shareholders agreement terms. If new investor doesn?t like it, he can walk away. If he does like the business and he is performing, he effectively gets to buy at a discounted price.
- shares control (but only after 1 year);
- takes some capital off the table (about 3 x NPAT);
- retains 50% of an enlarged cashflow and his job. Business value depends on strength of personal relationships so succession planning essential.