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One party controls 75% of the shares and voting rights of a small private company.

The other party controls 25%.

The larger party wants to buy out the smaller party to own 100%.

The shares were recently valued at £10 per share (that is the price the larger party paid for their shareholding).

The offer for the remaining shares is £6 per share, positioned as a ‘fair value’ discount for a 25% holding.

Is this reasonable? If so, what is it based on?

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No it's not reasonable. The larger party apparently thinks they paid a premium for their 75% of shares that they're apparently not willing to pay for the rest of the shares.

The question isn't what's reasonable. The selling party needs to figure out what they're willing to accept (or what the shares they're selling are worth).

You can only have a sale when the buyer and the seller agree on a price, there really isn't an obligation for the seller to agree to a 40% discounted price on something they own.

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    I don't think the last portion is accurate, you'd have to know the terms of the shareholder agreement to know if the minority shareholder can avoid being forced to sell and what protections they have from being forced to sell at a discount. – Hart CO Apr 17 at 14:29
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    So what you're saying is that per shareholder agreement I could force a minority shareholder to sell their shares at a price that's nowhere near fair market value ? – xyious Apr 17 at 15:00
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    I'm saying you can't state with certainty that: "You can only have a sale when the buyer and the seller agree on a price", because you don't know the terms of the shareholder agreement. – Hart CO Apr 17 at 15:16
  • (-1) There are legal protections against a fraud on the minority, but it's common for the majority shareholders to have rights to acquire the remaining stock. The issue is the price. – Andrew Lazarus Apr 17 at 17:07
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    It's worth noting that the Takeover Code, although it probably doesn't apply here, would force the larger party to make an offer for the 25% at the same price they paid for the 75%. – Ganesh Sittampalam Apr 17 at 20:04

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