Shareholder Exits

Managing your exit from a business can be tricky at the best of times, but for those with business partners it can be even more complex. The main challenge is how to best approach discussions with your business partners to make constructive progress as opposed to being stuck in limbo, something no-one wants.

If your business is owned by a company that has a shareholder agreement, then there is probably a good starting point. The shareholder agreement, if documented in enough detail (and signed!), will most likely have specific provisions dealing with both the exit of a shareholder and the valuation of shares. But even if a shareholder agreement is in place there is likely to be a significant amount of discussion that will require experienced guidance to navigate the positive exit that you are after.

It’s also important that this process is handled in a constructive, proactive way and one that recognises the respective position of each party. Without a deliberate process, it places unnecessary risk of interrupting, or at least of providing an unwanted distraction to an otherwise successful business.
Some of the challenges we see (and help address) are:

• Access to an independent external market perspective – particularly on valuation and potential purchasers
• Clarifying what each shareholder wants – who wants to stay and who wants to go
• Getting agreement on process and valuation methodologies
• Working to a timeline that works for all shareholders
• Being able to identify a new shareholder that can work with the remaining owners (assuming they want to stay). 

The reality is that it’s often very hard to find a single shareholder to replace an exiting shareholder and therefore there is a question on how to facilitate and negotiate a transaction with the remaining shareholders.

Being independent and experienced in transactions means that we can provide an external perspective that helps everyone progress.
We are also often acting for the exiting shareholder(s) in situations where the existing trusted advisors are already acting for the company or the other remaining shareholders. There is always a point in time where the exiting shareholder(s) need their own independent advice. Aside from providing that experience and advice our involvement helps to remove doubt surrounding potential conflicts of interest amongst advisors.