A lower valuation? Help the company out of the crisis together with your staff!
A low valuation can be advantageous
We have previously written about the possibility of setting up a so-called trust office foundation, or STAK for short. In the STAK, shares are certified, the voting rights of the shares are deposited with the board to be elected (usually the major shareholders) and the shares then retain only the economic (profit) rights. For example, a STAK is often set up to allow employees to share in the profitability and growth of the company without giving away control. In addition, the employee also benefits from an increase in the value of the company. In this blog we discuss why now might be a good time to allow employees to participate in the STAK.
In order to give employees the opportunity to share in the results and value development of your company, you do not want them to have to buy in at a high valuation. For the employees who participate, it is highly uncertain whether the future results will be high enough to generate a return on this investment. For many companies and employees, now is therefore a good time to set up a STAK and let employees participate. Many companies will have performed less well in 2020 than in previous years, and based on the results in 2020, a lower valuation is easily defensible to the tax authorities.
In addition, staff participation can also help the business through this crisis. Despite the fact that 2020 had a historically low number of bankruptcies, it is expected that in 2021 the number of cash-strapped companies will increase significantly. A capital injection through the issue of certificates can help. This can create a win-win situation whereby employees can invest at a low valuation and bankruptcy can be avoided.
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