Owner managed businesses and equity dilution

Owner managed businesses are increasingly looking to dilute their equity in favour of a key employee by granting them share options or issuing them shares straightaway. It gives employees a sense of ownership and assist growing businesses with finding and retaining the right talent.

However, if not thought carefully, it can lead to unwanted consequences.

Here are a few issues that you need to consider: l Linking share option or shares to performance or time of service. l Sharing value of your business with your employees and retaining value of the business you built before their time. l Retaining control over the company after issue of shares. l Some specific situations - addressing a situation of the employee leaving before you sell the business or protecting your family’s rights if something happens to you before your plans are realised.

There are various issues to consider and our experts can help you putting in place tailored solutions to help you achieve your goals.

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