My client is in the process of selling shares in a company of which he is currently the sole shareholder. The current proposal is that 75% of the shares will be sold for £4.5m (the company is valued at 4x EBITDA based on the company’s latest accounts). The base cost of the total shareholding is £100 000. An adjustment will then be required one year following the date of disposal. This adjustment is to be determined by the movement in EBITDA comparing the amount in the accounts prior to the transaction with EBITDA based on the following year’s accounts. The effect is that my client will be required to either give up more shares in the company if EBITDA falls but is entitled to receive equity back in the company...
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My client is in the process of selling shares in a company of which he is currently the sole shareholder. The current proposal is that 75% of the shares will be sold for £4.5m (the company is valued at 4x EBITDA based on the company’s latest accounts). The base cost of the total shareholding is £100 000. An adjustment will then be required one year following the date of disposal. This adjustment is to be determined by the movement in EBITDA comparing the amount in the accounts prior to the transaction with EBITDA based on the following year’s accounts. The effect is that my client will be required to either give up more shares in the company if EBITDA falls but is entitled to receive equity back in the company...
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