Purchasing Shares in a Business?

Discussion in 'Growing and Managing a Business' started by ejordan, Sep 6, 2013.

  1. ejordan

    ejordan
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    Hello,

    A friend of ours has approached us and asked us if we are interested in buying 35 shares of her business.

    I don't have hardly any experience with business ownership.

    How should I respond and what things must I consider before moving forward?

    Anything specific I should ask her before proceeeding? Should I ask her how much the 35 shares cost?

    Just wondering how this works....

    Thanks so much for any assistance.
     
  2. onegoodman25

    onegoodman25
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    I would never partnership with a close friend. No business worth loosing friend, and partnership always comes with trouble ( I would avoid it politely with an excuse )
     
  3. ejordan

    ejordan
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    She's actually more of an acquaintance than a close friend. Can i keep it simple.....stay out of business decisions, etc? What are the benefits to ownership.....ultimate sale of the company?
     
  4. Changed Creation

    Changed Creation
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    Hi Ejordan
    I think answer this question to yourself first. Would spending your Time, Effort, Mindsets and Currency on her business, in whichever way you decide to do your investment, take you closer to your goals? If not. Do't do it. When opportunity comes our way, we sometimes tend to immediately respond yes, but I have learnt from a mentor of mine ockert Molloer. that it is by saying no more often, that we can say yes more often to the things we really want. Hope this helps!
     
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  5. ejordan

    ejordan
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    I guess I need to rephrase. I believe her business will be extremely successful. What I'd like to know, is what questions should I be asking her in order to help me better understand what she needs from be (besides investment) before I make a decision.
     
  6. Rocky

    Rocky
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    Perhaps asking what else shes expects from you apart form purchasing the shares?

    You should be asking her about how many shares there are in total and how they are divided. So you know how much ownership you have and what would be the returns from such an investment. If it is worth it then you can decide whether to buy the shares or not.
     
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  7. Fergal

    Fergal
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    You should find out the following;

    • What percentage share of the business do those 35 shares represent
    • Can the business issue more shares, thus diluting your ownership percentage
    • Will the shares give you any say in the management and direction of the company
    • Will you be able to resell the shares.
     
  8. ejordan

    ejordan
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    Ultimately, the return on my investment would only come from a sale of the business, or sale of my shares to an interested party, correct? Ownership does not entitle a partner to much more than this correct?
     
  9. ejordan

    ejordan
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    Should I ask how much the shares cost at this point?
     
  10. Fergal

    Fergal
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    That depends on the contractual arrangement that comes with that ownership. Many share owners will receive a dividend or share of the profits and that's something that you might request as part of the return for your investment.
     
  11. Changed Creation

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    Hi. What you do with your money as an investment should be guided by managing your risk (potential to loose capital) in such a way that you keep it low. So write down what each of the risks are if you become a shareholder. And write yourself a detailed action plan how you are going to manage each aspect down. If the results are in line with your purpose of getting involved, then go for it. In any investment you have to ask yourself if you can control the risks. In the final instance the growth of your investment responsibility, rests with you. Also don't get involved unless you really what to.
     

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