74

The unspoken point behind your question is that people often talk about the value of companies in terms of their market capitalisation which is the price of one share times the number of shares. This methodology has obvious flaws - if all the holders wanted to sell at once the price would plummet, and if someone tried to buy all the shares at once the price ...


64

Private companies don't have liquid secondary markets. There are no identified buyers of your shares. The next time there's a fund raising round at the company they will include some or all of your shares in the transaction at whatever valuation is being used for the transaction. What you need to calculate the value of the shares is a buyer for your ...


54

Things to look for: They contacted you first. You always have to ask yourself how they came by your contact. If they have a really good product, they would not have to SPAM to sell it. Clarification, due to some comments: By "they contacted you first" I mean you do not know them, it is not something forwarded by your bank/broker etc. and you never purchased ...


44

Companies raise money so they can spend it, by and large. So the first thing this tells you is that the company (upGrad in your example) will have some money to spend. It might be able to hire more instructors, or more sales staff. It might be able to acquire a big new building, or spend more on advertising, or other "you have to spend money to make ...


44

The term "billionaire" is not a legal or technical term; it can mean whatever you want it to mean. Most people would define it as someone who owns at least $1 billion in assets. If you own a company, and you convince one person to purchase 0.0001% of the company for $1000, you could argue that your company is worth $1 billion. Sure, call yourself ...


37

No, private companies have no obligation to help you sell their shares. It may not be legal, but there is very little you can do short of suing the company. Great article about this from the Wall Street Journal here. You could approach the company and ask if they are interested in buying back shares, or if they know anybody who is interested in buying. But ...


26

If my friend gives me a thousand dollars for 0.0001% of my "company", am I technically a Billionaire now? $1000 is definitely 0.0001% of $1Bn. You'd be a billionaire IF: you own the other 99.9999% of the company, and have the $1000 from your friend and other people would pay -- and continue to pay -- just as much as your friend for shares. (If ...


24

The company going public is probably your best chance of being able to sell your shares. Therefore, your first job should probably be to try and see if there are any indicators that this might still happen: scour their website and financial news websites for anything that might indicate that this is still a possibility. If you do still have contacts within ...


23

One reason for a Private company to restrict the number of shareholders is that is there are additional SEC reporting compliance requirements once you exceed the threshold of 2,000 shareholders / 500 non-accredited investors: Exchange Act Regulation Even if your company does not have an effective registration statement for a public offering, it could still ...


19

I have received non-scam emails containing an offer to buy my shares, but (1) they were from the bank that manages my shares, and (2) it was in reaction to a public offer for those shares. So it was a higher price than I paid, but that is normal in a take-over bid. Further signs of a non-scam bid: there is a public, legal document describing the offer, and ...


17

There are two main types of pensions to consider in answering your question: (1) Defined Benefit pension plan. This type is the 'traditional' pension plan. It means that when you retire, you get a benefit based on, generally, years of service & salary over that period. Even if the market fails, the company still has a legal obligation to pay out the ...


16

The answer to this question is related to another question: How would I invest in Uber? Given that Uber is a privately-held company, the average investor cannot directly buy stock. However, there are some indirect methods that you can use to invest in Uber, and as a result, it is also possible to indirectly short Uber. One method is to invest in (or ...


13

There are a few common errors you are making in your statement. Before I try to address what I see as problems with your line of thinking, take my overall response to the headline of your question as asked: Why is it ever a good idea to found a company? To make money, to pursue a hobby, or both. As to issues with your line of reasoning, consider: (1) A '...


11

Yes, but only if they're looking for investors. You would need to contact them directly. Unless you're looking to invest a significant sum, they may not be interested in speaking with you. (Think at least 6 figures, maybe 7 depending on their size and needs). This is otherwise known as being a Venture Capitalist. Some companies don't want additional ...


11

Typical IPOs tend to have a lock-up period which prevents insiders (founders, employees, venture capitalists) from selling their shares for some amount of time after the IPO. The waiting period tends can be up to 6 months although SPACs tend to have much longer lock-ups. The purpose of an IPO lock-up period is to prevent insiders with large positions from ...


11

tl;dr– Someone has a strong claim to billionaire-status if they have immediate ownership/control of at least a billion-USD and no debts/liabilities. Others might claim billionaire-status with various caveats. It'd seem reasonable to reject sufficiently unreasonable arguments. Strict definition of billionaire and various approximations. A reasonable ...


9

Ask your accountant for a profit and loss statement for the current year. What you're showing us is is a balance sheet. You can't infer taxes from a balance sheet but you can from a profit and loss statement.


9

In general, shares in a private company aren't worth anything. (Unless the company is paying dividends or they give voting privileges or something.) There's no good way to convert them into cash unless the company is buying.


7

would this be a loan to my company? Yes, or alternatively the company could issue out some new shares increasing your holding in the company over your partners. Another alternative would be that each partner ponies up an additional $5,000 in capital and the equity split remains the same. If so, what parameters can I use to determine a reasonable period ...


7

A small business' bank loans and credit cards all require a personal guarantee by the owner, in addition to the business' promise to pay. Large businesses can get a loan with no personal guarantee. In this Inc.com column, an entrepreneur with tens of millions of dollars of annual revenue celebrates his new loan that had no personal guarantee requirement. As ...


6

If X initially has full ownership and control of the company, then it is X's choice what is done with the company's stock and assets. There may be tax and accounting rules and consequences, but fundamentally X is allowed to move personal funds into the company (investing their own savings) or take funds out of the company (paying themselves salary or ...


6

No. Some profits could (and should) go to retained earnings. You will only received income when it is distributed to shareholders. It happens when the owners decide it should happen. Keep in mind that in the case you cite, $100 profit is made and held as retained earnings, the company's value increases by that $100. Your net worth would increase by $...


6

The key here is that you are defacto running your own company no matter if you acknowledge it or not. In the end these questions have the goal of deciding if you can and will repay the loan. Presumably you filed taxes on your income. These can be shown to the loan officer as proof you have the ability to repay your loan. Running your freelancing as a ...


5

Pay someone a fee to borrow their private Uber shares, then sell those private shares to someone else, then find someone else you can buy their private shares from for less than the net of the proceeds you made selling the borrowed shares you sold plus the fees you've paid to the first person and return your newly purchased shares back to the person you ...


5

How can I get quarterly information about private companies? Ask the owner(s). Unelss you have a relationship and they're interested in helping you, they will likely tell you no as there's no compelling reason for them to do so. It's a huge benefit of not taking a company public.


5

This answer applies only to corporation tax, not income tax. Different things, income tax is much higher. 12.5% is the low rate for corporation tax. The standard rate is 25%. Or if you're Apple 0%. Like many countries Ireland will only consider you eligible for the low rate of corporation tax if you (your Irish company) can demonstrably prove yourself ...


5

No, they cannot force you to sell simply because of your status. When companies go private though, they frequently invoke "drag along" clauses in shareholder agreements which may specify that in the event of such a sale, everyone must sell.


5

It depends. If the business is scalable, you can try starting on a small scale. A colleague of mine did that, and last I heard, their business is now booming. Both spouses were salaried employees at the time, and one spouse continued to be a salaried employee. So it's possible but, from my observations, at least, it's the exception rather than the norm. ...


5

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 ...


5

Some companies may not want their shares to be widely distributed Consider a small, family owned corporation. One of the part owners needs cash now (for example, due to a divorce settlement). Without a clause in the corporate bylaws stating that existing owners have Right Of First Refusal, that cash-needing part-owner could sell to an outsider, which ...


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