They used the shares of their company. This was not unique or even rare; it happens all the time.
You can buy another business for “paper” even when your company is not listed on a Stock Exchange.
Many years ago we bought Kenya Data Networks for paper, by giving its owners 10% of Liquid.
Your own business might be quite small but the same technique is possible, provided you have a properly registered company. You can give shares to buy another business, or you can go for a full blown Merger.
You will find many examples of this on Masters of Scale, and Business Wars. When you buy a business in the same industry as you, using shares, your objective is create a bigger company.
I love this technique because it means I can keep cash for other things. It does however mean that I’m accepting new partners into the business, who must often be given board seats, and all rights of ownership that I have.
How to know the worth of your company’s share
A well trained Accountant or Banker knows how it is done. We call it Valuation. It’s much like when you sell a house, and you ask someone to value it for you.
They usually look at how much money you are making [Profit not Revenue]. And several other factors including the industry that you are in.
You can actually train yourself to understand exactly how it is done. I’m very good at it now, having done it for years.
Then comes the negotiations of trying to persuade the other party.
By Strive Masiyiwa
- BUSINESS LESSON: Do Business To Be Rich Not To Look Rich
- How Corruption Has Become An African Culture In Doing Business
- How You Can Identify Business opportunities Right In Front Of Your Eyes
Please use the button below to contribute to Newslex Point, Inc. using a credit card or via PayPal.