HomeSMEs, directors & shareholdersShareholder disputesBusiness exit, share sales and valuation

Managing a successful exit from a company is always important - but it can be hard without proper planning. Our expert team have deal with all types of issues arising from company exits by shareholders, directors and other key personnel.


A company may be set up for numerous reasons, but almost always the success of a company is determined by its profitability and sales. A company may exist to provide a business for the family, or it may be a short-term or one-off venture designed to provide a quick return.

Whatever the nature of the business the exit from a company can be difficult, often due to lack of procedures for this to happen and arguments about the terms of the exit and the value of the departing persons shares.

Prejudice to minority shareholders

It is not unusual for a minority shareholder to find themselves at the will of a controlling director or the majority shareholders.  Out team at FWJ specialises in helping protect minority shareholders and if required, bring an unfair prejudice petition to help protect their interests.

Exit of directors

A director, subject to the terms of his / her employment contract or service level agreement, is an employee and may have their employment contract terminated.

  • However, their statutory position as director can only be terminated in accordance with specific legal requirements normally requiring a resolution of more than 50% of the company’s shareholders.
  • Otherwise, a director’s position may be vacated under the terms of a company’s articles of association, including by retirement, or in accordance with a shareholders agreement.

Shareholder exit

As with any other shareholding, shares can be sold to a willing purchaser.

  • With private companies this can be a little more difficult – there is a question of valuation, there is the right of current (and potentially opposing) shareholders to have the option to acquire your shares and there is a risk as to the devaluation of your shares if you have a non-controlling minority interest.
  • For the remaining shareholders / directors there is the risk that the departing shareholder will take their money and set up a new company (thus damaging what is left). They leave with knowledge of the business but are no longer bound by their legal duties of fidelity and trust.

We have helped many departing shareholders do so on a structured and amicable basis.

Provision for exit under shareholders agreement

A shareholders agreement can provide for dispute resolution and arrangements to properly manage the exit of an owner / manager from the company’s business, dealing with aspects relating to protecting the company and its business in the current form whilst also properly delivering a return to the outgoing shareholder (including providing for a reasonable market value and in certain circumstances avoiding any minority discount.

We can review the terms of any shareholder agreement to make sure the provisions are properly followed and a successful outcome reached.

Minority discount on shares

When a minority shareholder sells their shares, sometimes a discount is applied to account for the fact that the shares don’t provide a majority control over the company. If you have any concerns about the way in which a minority discount is being dealt with, our team is here to help.

1 Disputes and rights of pre emption

In a private limited company, the valuation of shareholdings can be complex, and can often be the subject of dispute, particularly if a shareholder is forced to sell their shares following a fall out between owners.

If a shareholders’ agreement is in place, this may provide a right of pre-emption on share sales. This means that existing shareholders have the right to purchase an exiting shareholder’s shares before they are offered to any third parties. This might give an unfair advantage to existing shareholders to insist on a minority shareholding discount, which the shareholder might have to comply with due to the shareholder agreement.

2. Quasi-partnerships

These issues often arise in small or medium sized private companies. However, the good news for an exiting shareholder is that if the business is essentially a ‘quasi partnership’, i.e. where the shareholders and directors all take part in the running of the company, then case law in this area has tended to support the fact that there should be no discount for minority shareholdings in these circumstances, unless the shares had been bought at a discount in the first place.

Therefore, if a shareholder can demonstrate that they are in fact a quasi-partner then they may be able to avoid a minority discount shareholding.

3. What is a quasi-partnership?

A lot of small companies are regarded as quasi-partnerships. They are essentially small partnerships which have limited liability because they are registered as companies at Companies House.

To all intents and purposes however they are run like partnerships, where the directors and the shareholders are the same, and between them run the company equally.

Share valuation & independent valuations

Whatever the company or company officer situation, when a shareholder wants to exit and sell their shares, it is recommended that an independent valuer is appointed to value the shares, particularly if there is no other method for valuation set out in a shareholders agreement.

Share valuation is very much dependent on the type of company, and the financial position of a company, as well as the general economic climate at the time of the valuation.

If you are intending to sell shares, we highly recommend that you seek expert advice on valuation.

1. Publicly listed company

In a quoted company listed on the stock exchange, valuation is much more straightforward, as there will be a daily share price listed. This may fluctuate day to day given market conditions, but it will be set at whatever the share value is listed on the day that you wish to sell your shares.

2. Private limited company

In the case of a private company share valuation is more complex. It is impossible to say how much your shares are worth as a generalisation, but there are some methods that will help determine an accurate and fair value.

Contact us today to schedule a free initial call and let us guide you through the complex process of shareholder exit, business sales and valuations.

Francis Wilks & Jones were responsive, available at all times to deal with any of my queries and very reassuring. I would definitely recommend them to deal with proceedings brought on behalf of shareholders – they understood our practical needs.

A shareholder we helped bring unfair prejudice proceedings against a fellow shareholder who had been interfering with the management of the company and damaging its value

Key contacts

Andrew Carter

Andrew Carter


Maria Koureas-Jones

Maria Koureas-Jones


Stephen Downie

Stephen Downie


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