How do you set a Price to your company stocks

NuevolutionNuevolution Posts: 30subscriber Bronze Level Member
edited August 2006 in Startup Funding
Hello SUNies, I am stuck on a very serious matter, here. As you know I Incorporated my company and have been looking for investors. I finally have an investor that, is willing to invest but I don`t know how to handle this. Should I sell company stocks? How do you set the value to your stocks? How do you know what the price of each stock is? Do you just say OK, I am going to sell you company stocks at 1,000.00? What do I do? Please help.

Comments

  • robertjrobertj Tampa Bay, FloridaPosts: 0subscriber Member
    Edgar,
    Basically there are 2 ways to go.
    1. The simple (yet ultimately expensive way) is to "negotiate" a deal based upon what you and the investor can agree upon.
    2. The more complex  way is to establish a valuation for the company and build an investment offer from there.
    Generally, the second approach requires some professional assistance or previous experience in the process.
    Robert Johnson
     
  • NuevolutionNuevolution Posts: 30subscriber Bronze Level Member
    thank you.. can you please elaborate more on both.. if you may.. sounds interesting. So basically on #1. I set my price and it`s up to the Investor to say yay or nay?
  • robertjrobertj Tampa Bay, FloridaPosts: 0subscriber Member
    Edgar,
    Generally, the first approach involves one of you making a "first" offer - the other party counters and negotiations ensue. If you pick a $ amount that you are unwilling to change - then the result would be a "take it or leave it" situation. If you are only going to have one investor - this approach might be OK. Even so it is frequently challenging to get to agreement with both parties feeling they have been fairly treated.
    If you want to discuss specifics- contact me privately.
    Robert Johnson
     
  • NuevolutionNuevolution Posts: 30subscriber Bronze Level Member
    Engraver, Here is the thing. I been in business for almost 5 years now. I incorporated the business not long ago. Selling stock has been something I`ve been contemplating to do for quite awhile. I have a Networth of around 45-55K a year. I know it`s not alot but for what I had, when I started the business trust me I am well of now. I started my business with a $200.00 dollar Credit Card on one hand and a lay off slip on the other.. The person that wants to invest in the company is an angel investor, and I was going to make him be the vice-president. I want him to know where his money is going. I am not affraid of doing this because he would only be vice-president for one of  the divisions... so for say the corporations legal name is : "Hispanic Marketing Strategies Inc." with 2 dba`s being Nuevolution, Nuevohost. he wouldn`t invest on HMS Inc. but rather on Nuevohost per say. This is why I am not to worried about the horror stories, or wonder if I am going to be on the same band wagon as Steve Jobs... "Got fired from Apple" ...What do you guys think of this move?? Feasible or not?
  • robertjrobertj Tampa Bay, FloridaPosts: 0subscriber Member
    Edgar,
    With all respect to all the folks who are tyring to help you by offering their input - much of which is opinion and/or myth.
    You need professional advice on this issue. There are a number of things that need to be taken into consideration -including the best way to consumate your deal. An improperly done deal has long term effects that can create headaches well into the future.
    Yes, as professional business advisors - this is the type of service we provide - but if that is an issue, I`ll be happy to give you the names of other folks who can and will help you. Just send me a private message.
    Robert Johnson
  • NuevolutionNuevolution Posts: 30subscriber Bronze Level Member
    This is a question..Can it be handled like that? why would it be inproper? Please elaborate?
  • robertjrobertj Tampa Bay, FloridaPosts: 0subscriber Member
    For openers - a dba is not a legal entity!
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