I own stock in a private company that is exercising its right to repurchase.

Asked almost 5 years ago - Baltimore, MD

How do i know if they are giving me the proper value for my shares? Also, based on my understanding of the agreements I'm not sure if they've followed it to the letter for the repurchase. How can I best find an attorney to review this and what might the initial costs be for a review?

Attorney answers (3)

  1. Mark L Rosenberg

    Contributor Level 15

    Answered . This is determined by the corporation's shareholders' agreement and other governing documents. You should retain counsel to assist you on protecting your interests.

  2. David Hamlin Madden

    Contributor Level 14

    Answered . Most business and general-practice attorneys could review your purchase agreement and tell you if the company is following it closely. For valuation questions, an attorney who brokers business purchases and sales may be more helpful. A Google search for "Maryland Business Brokers" turns up a bunch of hits; perhaps one of them can refer an attorney that they work with. The agreement review would probably be inexpensive, but (depending on how large the company is, how much information is available to you, and how detailed you want to get) the valuation may be more expensive.

    As you might imagine, valuing a private company is more of an art than a science, and two different evaluators could give significantly different numbers based on the same data. Of course, the company's valuation will probably be much less than the valuation your lawyer or accountant comes up with. If you're lucky, there will be a procedure in your purchase/repurchase agreement that can be followed to come up with a "fair" number.

    Congratulations on getting this far; people who own shares in private companies often get nothing at all for them.

  3. Kaiser Wahab

    Contributor Level 14

    Answered . With regard to the valuation of the shares, you should determine if the Board, or Officers, engaged any third party accountants to provide one. Also, you should review the agreements to determine if there is a formula for calculating the price per share.

    I hope this helps.

    Disclaimer: This answer is for informational purposes only and does not constitute general or specific legal advice, nor create an attorney client relationship.

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