I’m serious, it’s easy, all you need is someone who wants to sell something, someone with the relevant funds who wants to buy the same thing and for these two people to agree on a price. That’s it.
When it comes to selling less than 50% of a company, if we know that the people who own the shares want to sell them it should be easy. But what if they don’t really want to sell. What if the remaining shareholders want them to sell and have told them either to sell or to agree to contributing to the overall costs of taking the company going forward? If that investment level is simply not an option financially for the unpopular shareholders, their only option is to sell. But they’re unwilling sellers.
The problem with an unwilling seller is that they value things far higher than they’re worth. Think about something you’ve sold, a car you hate that you know will fail its MOT, you’d take anything for it. You just want rid of it. But selling your pride and joy, a car you think is beautiful and perfect in every way, is much harder. Add in that you’ve just had some great news about the car and where it will be driving for the next year and suddenly your over inflated value needs even more zeros adding to it.
But any sensible buyer will have valued shares properly, not with rose tinted glasses, not with the extra pounds added because you just feel you deserve it or are entitled to. So how do the sellers persuade the purchaser they need to increase their offer? You try to back them into a corner by threatening to sell to someone else. You suggest that a ready and competent buyer is round the corner with a deal pretty much done even where for a range of reasons, it is no doubt absolute nonsense.
This situation doesn’t work when you’re trying to sell to people who aren’t morons. If you’re trying to rush an idiot who doesn’t have advisers to sign on the dotted line, producing a deeply flawed businessman with many failed ventures in his past and whose assets are a social media account, a bad haircut and eight cans of Aldi Cola as a rogue competing bidder might just get the deal done. But if you’re trying to outwit someone represented by some of the highest profile lawyers and accountants you’re wasting your time.
The real insult to the above individual, who is clearly very interested in the company shares himself, would be trying to make exactly the same play again a year and a bit later. Tell the media that there are potential purchasers and the shareholders are prepared to do the right thing and sell, introduce a suitably wild and mysterious buyer who, despite having no useful experience, no money, a history of bankruptcy and, curiously exactly the same writing style as one of the existing minority shareholders of the company and watch as the genuine potential buyer and his family give in and agree to pay much more than the shares are worth. Put simply, it won’t work.
The shares are overvalued. First of all they are minority shares so no sensible purchaser would buy unless they were given guarantees by the rest of the shareholders that they’ll have effective control of the business as a whole. Secondly, the business needs high levels of investment which means that the spending only starts with the shares, it certainly doesn’t end there. And finally, every day that is wasted, the company’s value very slowly, very gently dips as employee contracts aren’t updated, staffing levels aren’t increased, buildings and land aren’t renovated etc, etc
If the supposed investor was the real deal there would have been meetings with the directors and shareholders staying on, however, if the remaining shareholders said they hadn’t met the mystery investor at all you’d have to assume this is all a load of bollocks.
I stand by my opening remarks. Selling something is easy, we have the asset, we have a willing seller, we have (we understand) a genuine willing buyer who is financially able to work within the existing set up of the company ownership to invest and help it move forwards, we have a price on the table that is reasonable and fair…
In that situation, it’s time for the other shareholders to finally move on completely, sell up, get out of the company and stop trying to barter a better price by using contacts in the media to big up stories that are simply preposterous. They cause irritation, upset and threaten the success of the company over the immediate and medium-term future. The only definite is it will reduce the value of the company rather than enhancing it which is bad for everyone.
