Exit of a (minority) shareholder, an exit under the best conditions

Belgium has over 1 million SMEs, of which 75% are family businesses. In family businesses, the transfer to the next generations remains an important point of attention to ensure a stable (family) shareholding and to secure the continuity of the business. At some point, the question arises whether a transfer to a third party is possible. In non-family SMEs, however, the evolution of the shareholding and the arrangement for transferring shares are no less important for the continuity of the company.

The exit possibilities for shareholders in non-listed companies are in most cases (very) limited. The shares have limited marketability or liquidity, which makes it more difficult for shareholders to sell them, certainly if it concerns a (minority) interest. The lack of liquidity also has a direct impact on the value of the shares or participation. When valuing shares in SMEs and family businesses, a discount rate is usually applied to take this limited liquidity into account. In concrete terms, the lower the liquidity of the shares or participation, the higher the discount and the lower the value.

A recent study by Deminor, in collaboration with Ghent University, shows that only 38% of the SMEs and family businesses surveyed have a liquidity mechanism that allows (minority) shareholders to sell their shares under certain conditions. As a result, in the vast majority of cases the exiting shareholder must find a solution himself to sell his shares or participation (at conditions acceptable to him). This often leads to situations where minority shareholders cannot sell their participation at a fair price, tensions build up and a shareholder conflict arises.

In the e-book ‘Exit of a shareholder: an exit under the best conditions’ Deminor summarises the different exit possibilities and the associated implications for the exiting shareholder. Based on our practical experience, we take a close look at the success factors for an efficient exit process and explain our own approach step by step.

Do you have questions about your own exit possibilities as a shareholder? Do Not hesitate to contact us for more information or to schedule an informal consultation via +32 2 674 71 10 or info@deminor.com.