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Started By
Message
Buying into a company (Long)
Posted on 7/23/14 at 9:01 pm
Posted on 7/23/14 at 9:01 pm
Ok here's the question, I work for my family company and their is 11 owners, I know it's a lot, but here is the thing my dad is head of all operations and is basically the Main man and runs the company, a few of his sisters and brothers are the other owners but have absolutely no idea of what we do or how much money we make, I am taking my dads position in years to come so I know the books and see the daily income, how would I go about buying out the owners like how much is their share worth lets say it's 50 grand, I don't have 50 grand just sitting in my pocket so say I go to bank and tell them I'm Intrested in buying into a company how does that loan work, can I pay that loan back with company profits since I'm an owner or do I pay out of my pocket
8
Posted on 7/23/14 at 9:05 pm to JakeMik
The longest sentence ever,....,.....,....,....,
Posted on 7/23/14 at 9:13 pm to JakeMik
Learn the business first and finish your English classes. You aren't ready to think about running the business and buying the other owners out.
Posted on 7/23/14 at 9:14 pm to JakeMik
Wow. I honestly don't know where to start.
Posted on 7/23/14 at 9:24 pm to JakeMik
The company is dead regardless unless you finish high school first. Then it might stand a chance.
Posted on 7/23/14 at 10:43 pm to JakeMik
A bank will not touch this and won't lend you money for your current business strategy.
Sounds like your aunts and uncles are getting a free ride. If the company is profitable, seems that you would have to pay them a higher premium than what their shares are worth currently.
If you can't afford to buy one out, you have a long road ahead unless your dad has the means to step in on your behalf and "buy them out".
Sounds like your aunts and uncles are getting a free ride. If the company is profitable, seems that you would have to pay them a higher premium than what their shares are worth currently.
If you can't afford to buy one out, you have a long road ahead unless your dad has the means to step in on your behalf and "buy them out".
Posted on 7/24/14 at 8:46 am to JakeMik
I would talk to your dad first and see what he thinks. Eventually you will want to get a full independent evaluation.
On the other hand you could try to buy out 1 aunt/uncle and pay it off quick, then use that to finance the others and pick them off one at a time. But they could be crazy and refuse to do anything.
On the other hand you could try to buy out 1 aunt/uncle and pay it off quick, then use that to finance the others and pick them off one at a time. But they could be crazy and refuse to do anything.
Posted on 7/24/14 at 11:03 am to JakeMik
Some important questions:
1) How is the company structured? LLC taxed as partnership? LLC taxed as a corp? LLP? General partnership? Corp? S Corp?
2) Do all 11 owners own equal shares?
I'm guessing it got to 11 owners via inheritence, divorce, etc. Probably a company started maybe by your grandpa or somebody, and the ownership has split over the years.
This is not at all uncommon. I work with a lot of family businesses where one or two of the members actually run the company, and the rest collect dividend or distribution checks!
If you at some point become serious, and a couple of the members want to sell out, you will first need to get a business valuation. Depending on the company it might cost a few grand. The company pays for it. You can have them value the business as a whole, and you can also have them value a share of the business (noting that due to marketability and control discounts, the value of a share might be less than just 1/11th of the company value).
As far as financing the deal, the business setup can dictate this. You can always just individually buy interests/shares from the other family members, using your own funds. You can also have the business redeem the shares/interests. The business could use a promissory note to pay off the departing members over a number of years.
So, yeah, it can be done, it's not easy, but it can be done.
1) How is the company structured? LLC taxed as partnership? LLC taxed as a corp? LLP? General partnership? Corp? S Corp?
2) Do all 11 owners own equal shares?
I'm guessing it got to 11 owners via inheritence, divorce, etc. Probably a company started maybe by your grandpa or somebody, and the ownership has split over the years.
This is not at all uncommon. I work with a lot of family businesses where one or two of the members actually run the company, and the rest collect dividend or distribution checks!
If you at some point become serious, and a couple of the members want to sell out, you will first need to get a business valuation. Depending on the company it might cost a few grand. The company pays for it. You can have them value the business as a whole, and you can also have them value a share of the business (noting that due to marketability and control discounts, the value of a share might be less than just 1/11th of the company value).
As far as financing the deal, the business setup can dictate this. You can always just individually buy interests/shares from the other family members, using your own funds. You can also have the business redeem the shares/interests. The business could use a promissory note to pay off the departing members over a number of years.
So, yeah, it can be done, it's not easy, but it can be done.
This post was edited on 7/24/14 at 11:05 am
Posted on 7/24/14 at 8:10 pm to JakeMik
You sound like you are way ahead of yourself. Don't you think you should sit down with your dad and ask him these questions?
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