Chit Chat
I am just below executive level & have no access to the accounts so can anyone give any quick advice on what I should look for / question?
Why the need to raise capitol (except for growth & expansion)
Perceived value of the company (independently based?)
Tax commitments
Future Public listing
It is an Australian company governed by Australian law if this makes any difference.
Thanks in anticipation for the serious replies
hth
The main things you should concern yourself with are what the dividend levels have been historically and what they are likely to be in the next few years and/or if anyone likely to buy the company in the foreseeable future. That's the only real way to get a return on your £50k.
The reasons they are doing this are likely to be (i) to raise money because it's cheaper/easier than from banks and other lenders (ii) They think they can get you to work harder if you buy a stake in the company and are less likely to leave.
Sep 30, 2014 -- 4:15PM, StillSkint wrote:
Crisp....thanks for the response. Is there any point attempting to place a time constraint for staged withdrawal of the 50k if I were to go ahead. Is this normal behaviour? I understand the intent is to let the money work for you (or be prepared to lose it) but maybe a safety net could be put in place to see how things go in the coming years
Normally you get the money back by selling the shares. They might do shares where the company has redemption rights meaning that they can buy them back at a fixed price and fixed date which would make them more like a loan.
It is a bit of a misnomer to think of equity as being cheaper financing than debt. The opposite is true, equity is a higher risk investment therefore demands higher returns. Also debt repayments are tax deductible whilst dividend payments are not.
Sep 30, 2014 -- 4:17PM, Ozymandius wrote:
Responding to a point made by Crisp;It is a bit of a misnomer to think of equity as being cheaper financing than debt. The opposite is true, equity is a higher risk investment therefore demands higher returns. Also debt repayments are tax deductible whilst dividend payments are not.
Depends on the company circumstances however generally you are right. I would never sell equity in my company if I could get a decent priced loan if I needed finance.
In this case with it being construction they may have exhausted all their reasonably priced funding lines. Just an assumption because not sure why they want to sell equity.
If by some chance this is a genuine enquiry my advice would be to go to a local chartered accountant and ask him to value the company for you for a fixed fee.Almost certainly if you're going to end up with a small minority holding in a family company and you're not even at director level the advice will be to steer well clear.
As others have said, what equity do you get for 50k.
What is the profit or loss for the last 5 years.
As a share holder you are still likely to be in a minority, because it's a family business.
Skilled workforce and customer base isn't a value, what happens if the customers or workforce get a better deal from competitors.
The equity you are offered will tell you what they value the company at this time, have this valuation checked.
This could be a great opportunity,or it could cost you your future, think about it for a long time.
Good Luck with what you decide.
unless ...
you can see the accounts, financial projections, influence the management and decisions in the business, trust the current owners, know what your equity is going to be used for.
Better stick to Betfair, IMO
