Premiumwriter2:
I'll personally draft and create a contract and get the very first investors to sign that at all times I'll own 60% of the shares.

All share sales and dilution will come from the remaining 40%. Can't come and form a company and then some modaf*ckers will push me out.

Lol.. Your comment cracked me up, but nevertheless I learnt something from ur point.
I'm a young guy working to set up a company, but pls I want to understand something.. What if the founder has all the ideas but doesn't have enough money to invest like other investors, how does he safeguard his position?
I hope I made sense with my question? If not, correct me

LagbajaTheBEREAN:

Lass lass, na sole propertorship go be the koko be that, partnership is not advisable bi that buh pesin wey no con get bar how hin wan take start sef...

Lol.. Na poverty yab man my brother. If you get your full money wetin concern you and investors?
Imagine person suffer create company, only to wake up one morning and be told by his board of directors that he's no longer the CEO, rather he's now the gateman of the company. ..shey no be civil war be that?

EdwardRandy:

Lol.. Na poverty yab man my brother. If you get your full money wetin concern you and investors?
Imagine person suffer create company, only to wake up one morning and be told by his board of directors that he's no longer the CEO, rather he's now the gateman of the company. ..shey no be civil war be that?

No be lie, boss man...

emmanuelewumi:


It can happen, it happened last week to the founder of Lekoil.

Strive the founder of Econet now Airtel.

The business needed huge capital when investors came the share of the founder reduced to 5%. The GSM license was bought at $280 million about 20 years ago.
Even with the 5% owners Strive became a multi millionaire in dollars. I learnt he is now the first black billionaire in UK

But i'm sure it's possible to increase your shares from 5% in future right? If possible, what ways pls?

EdwardRandy:

But i'm sure it's possible to increase your shares from 5% in future right? If possible, what ways pls?

Provided others are ready to sell.


Econet initially had a headstart over MTN, but because the founding CEO was trying to prevent the dilution of his holdings he frustrated all efforts to sell more shares of the company.

Until when he was kicked out, that was when the company started growing

emmanuelewumi:



Provided others are ready to sell.


Econet initially had a headstart over MTN, but because the founding CEO was trying to prevent the dilution of his holdings he frustrated all efforts to sell more shares of the company

Until when he was kicked out, that was when the company started growing

Oh I get it. Thanks

emmanuelewumi:


Different strokes for different folks, I am okay with 1% Zenith Bank than with 100% of a microfinance bank.

Your 1% ownership of Zenith Bank would have fetched you a dividend of N900 million in 2020


While the microfinance bank might not make a profit of N100 million in 2020

As if privately held companies dont grow

Glo and chi na public company Abi? So many examples of private companies doing well

I prefer it like that because I know say my product go make sense

Investors go dey but no be say Dem go chance me on top my shares

If you like Kuku dash wetin u suppose give your children as Inheritance to outsiders.

kayphyzee:


Think big Bro, think big. Going public gives the Company unlimited room for growth. After a while, you start thinking about sustainability. Building an entity that will outlive you.

NSE will require that at least 20% of the shareholding should be offered to the public. The big bank boys (Ovia, Elumelu, Late Aderinokun etc) still hold substantial shareholding in the banks (directly and indirectly) even though they no longer perform executive roles.

I have my reasons. Have you heard about Cargill?

Hassanmaye:

Haha then your company will never grow

Have you heard about Cargill?

phazotron:



As if privately held companies dont grow

Glo and chi na public company Abi? So many examples of private companies doing well

I prefer it like that because I know say my product go make sense

Investors go dey but no be say Dem go chance me on top my shares

If you like Kuku dash wetin u suppose give your children as Inheritance to outsiders.

I tire oh as if na by only to go public na company take dey grow.

Google "Cargill"

Available247:
Only intelligent and business oriented people can be on this thread. It's quite informative, thanks OP. Now I know what to do when creating my own company

Indeed. That's why it's good to read constantly.
Most people don't read

Instead of me.to get fired or booted out of a company I started, I would plan hostile takeover.

That's what concerns me now.

phazotron:



As if privately held companies dont grow

Glo and chi na public company Abi? So many examples of private companies doing well

I prefer it like that because I know say my product go make sense

Investors go dey but no be say Dem go chance me on top my shares

If you like Kuku dash wetin u suppose give your children as Inheritance to outsiders.

Adenuga does not have 20% of Glo, Chi sold about 80% of the company to Coca cola over a billion dollars.

Rick9:
Instead of me.to get fired or booted out of a company I started, I would plan hostile takeover.

That's what concerns me now.

You need shares for hostile takeover. If you have 50.1% you can't be removed and hostile takeover will be ineffective

phazotron:



As if privately held companies dont grow

Glo and chi na public company Abi? So many examples of private companies doing well

I prefer it like that because I know say my product go make sense

Investors go dey but no be say Dem go chance me on top my shares

If you like Kuku dash wetin u suppose give your children as Inheritance to outsiders.

Some of you also don't realize that shareholders will not try to takeover the founder just like, especially if it does not make economic sense. It's not really about control, rather usually about direction and profits. For a hostile takeover to be planned and agreed it has to make economic sense and the CEO must be perceived as erring.

Rick9:


I tire oh as if na by only to go public na company take dey grow.

Google "Cargill"

You have been talking about that Cargill many times now, I guess it is some form of counter example.

It is very unwise for a businessman to plan on exceptions. Yes exceptions do happen, but more likely than not, it is the tendency that totlaly controlled companies experience a slow growth and a big company will open it's shares to raise capital and takeover the market.

Premiumwriter2:
I'll personally draft and create a contract and get the very first investors to sign that at all times I'll own 60% of the shares.

All share sales and dilution will come from the remaining 40%. Can't come and form a company and then some modaf*ckers will push me out.

This is nearly impossible for many reasons, because a bulk of the dilution comes after the the early stage of the company, which is the growth stage, and also, because of the pre and post money valuation and certain types of clauses regarding voting rights, naming of directors and much more. I'm not saying it doesn't exist, but most investors wouldn't subscribe to this. May be possible for a small corporation but definitely not a large or mega type corp.

Afromentalist:


Some of you also don't realize that shareholders will not try to takeover the founder just like, especially if it does not make economic sense. It's not really about control, rather usually about direction and profits. For a hostile takeover to be planned and agreed it has to make economic sense and the CEO must be perceived as erring.

It is well

But better safe than sorry.

Investors that can't take 40%-45% are straight greedy that's the fact

No company can grow without investment, but allowing outsiders to own more than you is plain stupid

manny4life:


This is nearly impossible for many reasons, because a bulk of the dilution comes after the the early stage of the company, which is the growth stage, and also, because of the pre and post money valuation and certain types of clauses regarding voting rights, naming of directors and much more. I'm not saying it doesn't exist, but most investors wouldn't subscribe to this. May be possible for a small corporation but definitely not a large or mega type corp.

Why? Isn't that greed? So 40%-45% is too small for outside investors?

phazotron:


Why? Isn't that greed? So 40%-45% is too small for outside investors?

It depends on the capital needed for the business.

You can do a business of N100 million using your own resources, you can't do a business of N10 billion without external capital. It is a risk management strategy and not putting your eggs in a basket.

Do you think Mark Zuckerberg owns 10% of Facebook ni.

The guys who started Flutterwave can't own 20% of the company, the company is currently valued at about $1 billion.

This would not have happened within 10 years if they did not get external funding.

Having an idea or business dream is different from having the capital to harness the enormous opportunities from the idea or dreams

manny4life:


This is nearly impossible for many reasons, because a bulk of the dilution comes after the the early stage of the company, which is the growth stage, and also, because of the pre and post money valuation and certain types of clauses regarding voting rights, naming of directors and much more. I'm not saying it doesn't exist, but most investors wouldn't subscribe to this. May be possible for a small corporation but definitely not a large or mega type corp.

All shares rank parri passu, all shares will experience dilution once you get additional funds.

The founder's shares can't be insulated from the dilution

phazotron:


Why? Isn't that greed? So 40%-45% is too small for outside investors?

You don't have to sell shares you can raise debts, but the creditors can takeover the company if you don't pay up as agreed.

Shareholders are in it for the long run, whether you make profit or not. You don't have that luxury with creditors.


You need to consider the mixture of equity and debt that will work for the growth, sustainability and profitablity of the business

phazotron:


How will you not be the owner when you get majority shares there

In a very large company, the major shareholder can have 15% shares. Some other shareholders can have like 10,5,6,2,0.5% shares. If they merge,you can be removed in special instances. Let's say the company is in huge dept, u are the owner and major shareholder, but one of the shareholder is actually richer that you cos he owns other projects. When the board of directors see's that you have no feasible means of rescuing the company, u will be forced to sell your shares or part of it, thus making the new major shareholder the owner of the company.

Fanuchi007:

In a very large company, the major shareholder can have 15% shares. Some other shareholders can have like 10,5,6,2,0.5% shares. If they merge,you can be removed in special instances. Let's say the company is in huge dept, u are the owner and major shareholder, but one of the shareholder is actually richer that you cos he owns other projects. When the board of directors see's that you have no feasible means of rescuing the company, u will be forced to sell your shares or part of it, thus making the new major shareholder the owner of the company.

Even if the founder is not ready to sell his shares, the company's debts can be converted to equities which will dilute the holdings of the founder

emmanuelewumi:



Even if the founder is not ready to sell his shares, the company's debts can be converted to equities which will dilute the holdings of the founder

U get d point!!!

phazotron:



As if privately held companies dont grow

Glo and chi na public company Abi? So many examples of private companies doing well

I prefer it like that because I know say my product go make sense

Investors go dey but no be say Dem go chance me on top my shares

If you like Kuku dash wetin u suppose give your children as Inheritance to outsiders.

Glo is a publicly traded company listed on the bourse of NGX.

emmanuelewumi:



Provided others are ready to sell.


Econet initially had a headstart over MTN, but because the founding CEO was trying to prevent the dilution of his holdings he frustrated all efforts to sell more shares of the company.

Until when he was kicked out, that was when the company started growing

Econet CEO was actually against giving out bribes from the company account that was why he was kicked out.

ebukason3:

Econet CEO was actually against giving out bribes from the company account that was why he was kicked out.

He was against injection of more capital in order to avoid shareholding dilution. He owned 5% of the company.

Econet had a headstart over MTN, funding for expansion was why MTN caught up with Econet...

The business started growing, getting more capital in form of debt when the CEO was sacked.

Shareholders have the power to sack a board and the CEO. The shareholders of Econet were Lagos State, Delta State, Akwa Ibom State, First Bank, FCMB, Leadway Assurance, Crusader Insurance, Oba Otudeko, Subomi Balogun, Hassan Odukale family

Casper21:
The question “Can the board of directors fire the owner?” is becoming increasingly contentious. CEOs and founders of companies often find themselves out of a job after being fired by means of a vote undertaken by the board of the company. If the person in question is not the owner of a controlling share in the company, there is not much they can do to avoid being fired.

Sharing the ownership of a company leads to loss of total control over it. As external investors are brought in, owners' shares get diluted, and the founder of a company can often find that he or she owns less than half of the shares in that company. This leaves him or her at risk of being fired.

If a CEO has a contract in place, he or she may get fired at the end of that contract period, if the company has new owners or is moving in a new direction.

The CEO, despite being the person who incorporated the company, often gets fired in times when the company is experiencing a slump in financial performance. This is because internal company politics and differing leadership styles render people vulnerable.

If a founder gets fired, then the company's investors have obviously lost confidence in that founder's ability to establish profitability. Or, in the case of a company that is already turning a profit, they do not consider the founder capable of helping the company grow and evolving to meet the needs of a changing market.


...Strategies for Avoiding Dismissal....

Tech Crunch advises executives to always remain defensive, working with key players and building personal relationships with board members and shareholders. These, according to Tech Crunch, are the most important strategies in defending oneself from being attacked by the board of one's own company.

Founders and CEOs need to focus on more than the fact that they are indispensable – they also need to recognize the areas in which they are vulnerable. They can do this in a number of ways:

Knowing whether or not a board vote is enough to fire them.

Being aware of whether or not alleged wrongdoings need to have taken place in order for them to be dismissed.

Keeping one's ears open to listen for complaints and expressions of discontent, and
Being careful of the contracts that they sign.
An important step that CEOs can take to protect their position is to get all promises in writing. A CEO should never trust anybody who claims to always have his or her back.

Taxes on sale of business S corp can be a complex matter, but they do not grant the board of directors the authority to fire the owner of a company. The decision to remove an owner typically involves shareholder voting or adherence to the company's bylaws and operating agreements.

For me, I don't think so. As a driver of your car, I don't have that power or mental justification to become the owner.




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