Small company opportunity

[covmutley]

I work for a consultancy of circa 400 people. Im doing pretty well and it's going well for me overall. I seem to have a future there. But as the company has grown its become more corporate. I'm enjoying it less and I know some at the top feel the same, and i suspect they will probably sell the business in a year or 2. Increasing admin and policy an issue too.

I may have the opportunity to join a much smaller company of circa 15. They've been established 15 years and plodding along, you could say. Not exactly industry leading. I would be going to effectively head up the largest of the three disciplines they do. In someways a sideways step, but also maybe a nice opportunity. So testing waters.

Had an initial chat with the md (who is maybe 60) and im going back next week in person. I dont think the salary would be higher, and so I pretty much told him I want some upside, such as ownership at some point. He said it was the right question to ask and he understood. I don't expect anything from day 1. He didn't say no!

What I'm seeking thoughts on is what questions I should be asking him at the next meeting? And what could a pathway to some ownership look like? Perhaps a verbal 'in principle', or a commitment? Maybe a time frame.

Id be interested if anyone has been in a similar situation?

[996Type]

If you do agree, ensure it’s in writing and for a specific share (including timescales).

Try and limit any conditions that may be applied (anround your employment) and have a legal expert check over the final draft.

A lot of firms dangle the carrot but it’s important if it’s a real offer for both sides to have a defined pathway to realising & executing the benefit in a meaningful time scale.

Would also suggest that everything is in place long before you start work there in writing and you establish regular reviews to agree all the conditions are being met / on track towards your goal. Good luck!

[covmutley]

Thanks, that's already a lot more structured approach than I was perhaps thinking at first.

Not done this before and very early days of course, but the more I think about it if my salary is not going up, why would I move unless there's something set down from day 1.

[rog007]

Some say, one should only move for a c20% increase in overall package; this provides some compensation for the risk of change.

Even with an uplift like that, one must still do a shed load of due diligence to again reduce the risk of change.

Meeting the hiring manager on their home ground is clearly critical. But so is: meeting the staff; reviewing company performance and future plans; options for training & development; clarity on role and expectations (beyond any stated JD or JS); notice period and any clauses; domestics like commute/WFH/expectations of time in office etc; honest appraisal of why you want to leave the current organisation; and your gut feel.

Good luck and keep us posted!

[StevieBee]

The first thing you should do is go to Companies House, type in the company name and take a look at the information about the company, specifically its financials. Do a bit of Googling if your'e not familiar with how company accounts are presented. What you are looking for is financial stability, so several years of good profits and low debt with sales consistent and ideally on an upward trajectory, regardless of how steep. Also see how many owners there are (sometimes not all of them are apparent day-to-day).

This will tell you a) whether the company is financially robust or not, and b) the likely value of any shareholding you may get.

Things you need to establish:

Would you be entitled to receive dividends? Shareholders are entitled to receive a share of the profits and this is taxed much less than income tax so a tax-efficient way of earning a living. However, it is not a given that a company would do this so you should establish this from the off.

Would the shares give you a seat at the table? Good if they do, not the end of the world if they don't but if they do, you need to ascertain the risk because in some situations, this scenario obliges all shareholders to financially support the company. So if you have 10% of the company, you might also 10% of the company's liabilities.

And be alert to dilution. If the company falls into a cashflow problem in the future, they may issue a share call - ask shareholders to buy more shares to help them out. If you can't afford this or don't wish to buy more, your share value can be diluted depending on how the company releases the other shares at the time.

Shareholding can be very rewarding. But it can also be a case of bread today, jam tomorrow. Keep in mind that shares are not cash. The only time they become cash is when you sell them.

Ultimately, only you can determine if it's right for you but I would recommend looking at shares as icing on a cake. Ask yourself if you'd join the company regardless of any share offering. Or would a performance related bonus structure be better suited to your personal needs?

I've worked in big and small companies and each has their virtues but looking back, I'd take a small company any day. You're working in a much more agile environment, you have a greater impact on the success of the company, there's rarely any inter-departmental politics or cliques and the whole vibe is generally much nicer.

HTH