Anyone know about stock share values ?

[guitarbug]

Does anyone have a idea about when a small corporation is set up and they just throw out a number to avoid paying higher taxes to set up a corporation the value of a share? For instance, lets say you use a 100 shares at a par value of $1.00 then you have to divide 51% to 49% shares to both shareholders to start the corporation. Does this mean the corporation is only worth $100.00 ? Remember the term (par value) ! It seems to me that if those were just numbers put up to set up a corp that its worth more than that ? I know this seems like a dumb ?, but I need to know more about this pretty quick. If you were a shareholder in a business set up this way and lets say that the company is actualy worth about $400,000 and you were 49% shareholder of a $100.00 par valued company, what is you're actual share ? Does the value of those shares grow as the company grows ? Any help would be great.

[dbphotos]

I set up 1 corp. and valued the stock at $1 per share and then distributed shares accordingly. You can initially set up any amount of shares you want.

[guitarbug]

Originally Posted by dbphotos

I set up 1 corp. and valued the stock at $1 per share and then distributed shares accordingly. You can initially set up any amount of shares you want.

This is what we did initialy , 100 shares at a $1.00 a share. But now that I found out I am getting screwed over by my business partner I want out. But when reading our corp by laws I came across those share figures and thought, oh no! I can be bought out for $49.00! I guess I really need a business laywer to figure this out, just seems like I will get screwed over if I don't. They write those by laws so you can't read them without one!

[TxLerman]

Originally Posted by guitarbug

Does anyone have a idea about when a small corporation is set up and they just throw out a number to avoid paying higher taxes to set up a corporation the value of a share? For instance, lets say you use a 100 shares at a par value of $1.00 then you have to divide 51% to 49% shares to both shareholders to start the corporation. Does this mean the corporation is only worth $100.00 ? Remember the term (par value) ! It seems to me that if those were just numbers put up to set up a corp that its worth more than that ? I know this seems like a dumb ?, but I need to know more about this pretty quick. If you were a shareholder in a business set up this way and lets say that the company is actualy worth about $400,000 and you were 49% shareholder of a $100.00 par valued company, what is you're actual share ? Does the value of those shares grow as the company grows ? Any help would be great.

Chris,

The short answer to your question is that the value of your stock depends on the type of interest owned (minority vs controlling share), the marketabilty of the stock, the value of the business and the future outlook. The par value of the stock is meaningless in the context of your current dispute.

There are three basic approaches to valuing stock. The first is an income approach that is developed from your business' financial statements. The second is the market approach that is uses actual transactions in similar businesses as comparables. The third approach is the cost approach. This is basically the costs to recreate your business and your business relationships, etc.

Chris - you really need to get professional advice from an attorney and the assistance of the valuation analyst to help you address your problem with your business partner. Unless one of the TPF members is a practicing attorney, you really need professional advice to help you. I do business valuations, but I am located in Houston. I am an Accredited Valuation Analyst ("AVA") and I have done these valuations before and I don't mind giving quick answers. But, you really need to invest in getting the proper help. No advice you receive on this forum is defendable in a court of law. You will not be able to educate yourself sufficiently here to solve this problem on your own.

Contact an attorney you know and ask for a referral. I am confident there are qualifed lawyers and valuation people in your area to assist you.

David

[Steelsun]

Share value on a private (non-publicly traded) corp has no relation to the value of the corp.
99%+ of all corps formed in Texas have a $1 share value.

Contact a biz lawyer with a biz valuation specialist to determine the value of the corp for a buyout.

[guitarbug]

Originally Posted by TxLerman

Chris,

The short answer to your question is that the value of your stock depends on the type of interest owned (minority vs controlling share), the marketabilty of the stock, the value of the business and the future outlook. The par value of the stock is meaningless in the context of your current dispute.

There are three basic approaches to valuing stock. The first is an income approach that is developed from your business' financial statements. The second is the market approach that is uses actual transactions in similar businesses as comparables. The third approach is the cost approach. This is basically the costs to recreate your business and your business relationships, etc.

Chris - you really need to get professional advice from an attorney and the assistance of the valuation analyst to help you address your problem with your business partner. Unless one of the TPF members is a practicing attorney, you really need professional advice to help you. I do business valuations, but I am located in Houston. I am an Accredited Valuation Analyst ("AVA") and I have done these valuations before and I don't mind giving quick answers. But, you really need to invest in getting the proper help. No advice you receive on this forum is defendable in a court of law. You will not be able to educate yourself sufficiently here to solve this problem on your own.

Contact an attorney you know and ask for a referral. I am confident there are qualifed lawyers and valuation people in your area to assist you.

David

Thanks David! I absolutely will be getting one, but I was just getting a feeler out about that stock share ? wich you addressed for me! I just read that about our shares tonight and I always get great advice here from people like yourself so just thought I would see if anyone had knowledge about this. Thanks again.

[guitarbug]

Originally Posted by Steelsun

Share value on a private (non-publicly traded) corp has no relation to the value of the corp.
99%+ of all corps formed in Texas have a $1 share value.

Contact a biz lawyer with a biz valuation specialist to determine the value of the corp for a buyout.

Thanks Brian! I just about had a cow when I read that my shares were worth $49.00! I knew that all my hard work for years had to be worth more than that. I only hope I can find a honest lawyer, lol..