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it sounds like this company actually has ongoing profits, which means the shares do have value even without a liquidation event. Even closely-held small firms w
by mark212 9y ago
it sounds like this company actually has ongoing profits, which means the shares do have value even without a liquidation event. Even closely-held small firms with little turnover can be valued (e.g., partnership buy-outs, unexpected death of a key shareholder, divorce).
- cardine 9y ago> partnership buy-outs, unexpected death of a key shareholder, divorce Since this company is 100% owned by Rodrigues, all of those events would require Rodrigues to decide to sell, or for him to die and for his heir(s) to decide to sell - all things that I would classify as liquidation events. Maybe I am miscategorizing his viewpoints, but the article implied that Rodrigues doesn't plan on selling Soti. So unless you are expecting Rodrigues to die soon I'm not sure what path exists for any other theoretical equity holders to gain any value from their equity.
- mark212 9y agoA minority shareholder can force a liquidity event. For example, the founder gives 5% to a valued employee who after vesting and several years of company growth gets a divorce. Husband wants his 50% community property interest in those shares and the employee minority shareholder doesn't have enough cash. Court forces a sale. Alternatively, employee pledges the shares as security for a loan and then defaults. Lender forecloses. My point is this: there are ways for a minority shareholder to force a liquidity over the objections of the majority shareholders. Therefore those shares have value.