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A change in shareholders is coming. How can I make this easier?

Andrew Michelin

Quote of the day

" When valuing a business, you need to be able to look past the numbers. You need to identify the value drivers that will allow the business to compete, to grow and to generate free cash flow well into the future. "
Andrew Michelin CPA, CA, CBV, CFF

Your goal

Changes are happening in my business and it means parting ways with a shareholder, and/or onboarding a new one. How can I make the transition a smooth one for everyone involved, while at the same time ensuring that I’m protecting myself and my business?

How we can help

They say there’s strength in numbers. Partnering can be a great experience, but that’s not to say there won’t be bumps in the road. Perhaps you no longer share the same business vision, you now find yourself at a different stage or with different goals.

Maybe you’re expanding and need to add talent, or one of your children is ready to join the business.  In every scenario, positive or otherwise, making sure you and your business are protected should always be a priority.

Planning for Succession

When everything is running smoothly it’s the ideal time to plan for a day when that may not be the case.

Shareholders’ agreements and/or shareholders’ disputes

It’s a good idea for your shareholders’ agreement to include provisions dealing with the valuation of the business in different contexts that could arise (for example, termination of employment, death, disability or the desire of one shareholder to leave the company). These provisions can help companies avoid costly and disruptive shareholder disputes.

Where shareholder disputes do arise, a professional valuation can help resolve the dispute thereby avoiding litigation or protracted negotiations that could be disruptive to the business. If the dispute cannot be resolved outside the Courts, our valuations will provide objective, independent evidence leading to a fair and equitable decision with respect to value.

Employee share purchase and option plans (ESOPS)

ESOPS – including employee share purchase plans, employee stock option plans, and more creative vehicles, such as phantom stock plans – are becoming increasingly common. These plans present valuation challenges in respect of their administration, the preparation of the financial statements of the issuing company, and tax planning for the beneficiaries (i.e. the employees).

See also: Exiting a Business – Consider All Options