Business Valuation
Valuation of shares in private companies is quite difficult and can be challenging because:
- shares in private companies often lack marketability,
- the value of shares in private comapnies is often affected because they are owned by family members,
- if a shareholding in a private company does not carry certain rights, it can be less valuable, and more difficult to dispose of,
- the scale of private businesses often is such that they are local to a particular area or region,
- the terms attaching to shares in private companies often do not deal with important commercial issues such as breaking deadlocks between shareholders, or issues such as the appropriate rights attaching to shares,
- when forming private companies, often the last thing on the minds of investors is what happens when new investors join the company, or
- how any shareholders might structure an exit in the future.
As a result, it can be quite difficult to value shares in a private company.
So when forming or valuing a private company, shareholders would be well advised to consider suitable shareholding structures, and arrangements to deal with shareholder issues that may arise during the course of ownership in a business.
Business valuers of private companies will consider such matters when undertaking a business valuation.
www.battle.ie
Copyright © all rights reserved 2006
Business and Technology Links Ltd.
Telephone: +353 -1- 494 53 28
www.battle.ie
Telephone:
+353 -1- 494 53 28.