WWYD DH lending money again

[KatieMorag]

Dh has a long hiistory of lending our money to mostly family and friends without agreeing this with me first. Sometimes it gets paid back , sometimes not. We've had many many rows about this. He promises faithfully that he won't do it again. Then he does

Usually he lends money to his family. I don't mind if (a) we can afford it ( b) we get it back and ( c) we agree it between us. Sometimes we give money to family too, on the same conditions. This is because we are fortunate to be better off than most of our siblings.

About 10 years ago he borrowed £10,000 to lend to his sister. She never repaid it and it took us years to pay off the loan.

Last year he gave her £1,000 because she said she was in debt and couldn't pay her bills. She then took the money and went to Australia for a months holiday.

Earlier this year he lent a large sum of money to a colleague. By large I mean what I earn in a year. Today I discovered by accident that he's now lent this person another £10k.

I am so angry and Upset I can't even talk to him. It's not just the money, it's the lies , the deception and the broken promises. I don't know what to do.

[thixotropic]

Nothing technical to add, I know nothing about tax law.

But what a bastarding thing to do to your family.

[IvanaHumpalot]

OP - I have a childhood friend who's DF stole a considerable amount of money from his place of work over a long period of time. He used this to fund a lifestyle for the family. When he got found out the only reason he kept his job and didn't go to prison was that my friend's mum went in and agreed a plan where DF kept his job and the money was repaid out of his salary back to the firm. This took years.

My friend's mum then put a plan in place at home. DF had to relinquish ALL financial control to friend's mum. Not even a debit card, name off mortgage - everything, no access to bank account etc...

I know your situation is different, in that it is your business and I don't know how solvent you are with regards to your mortgage etc... but I can't imagine too many people can take a hit of £80k without it hurting. Nothing is recession proof.

If it was me, I would treat him like a recovering addict - no access to anything that would tempt him and insist he goes to counselling, something like GA. I wouldn't be pussyfooting around his male pride when my house, food on the table, clothes on the kids back and other peoples livelyhoods are being compromised by 'mr big'.

[Houseofplain]

The problem here. Is these men NEVER admit to what they don't have to.....so, slowly it's gone from 20k...to 60k....to 80k. As op asked herself.

I wouldn't be so confident there isn't more somewhere, some dodgy dealing, some dodgy loan. These types just never, ever change and they never admit it fully.

They still play the big I am über rich business man, with money to flash and hundreds of thousands in the bank. Whilst stuffing the debt letters under the shredder.

[KatieMorag]

Hi guys I am back with an update and to ask your advice. Two major steps, one personal, one business

We have started going to relate. Early days so time will tell how that goes

Main thing is that I have got my share of the business back . Rememebr it used to be 50:50 and we were told we had to change it ? Anyway that's all sorted out now.

I've made no progress on getting another accountant, as Dh was very resistant and I didn't want to rock the boat until I got my shares back.

Anyway, now there is a new spanner in the works and I woudl like to ask your advice please. Weve been approached by a much larger company who want to buy us. We had planned to sell the company in about 3-5 years but I don't think it's ready yet. Also I think the price being talked about undervalues us ( but then I would think that woulndt I )

I'm a bit suspicious as this approach came through this relatively new employee ( yes the one who borrowed the money from Dh). So my question is -what kind of professional advice do I need here? Lawyer? Accountant? And how do I find someone who specialises in thsi field?who /what do I ask?

[joanofarchitrave]

Bumping for you.

[OrangeImperialGoldBlether]

The fact is that he can't sell without your agreement, can he? Surely the first price you are offered is simply to open negotiations? And this employee - do you trust him?

[KatieMorag]

Thanks for bumping. No he can't sell without my agreement. Actually he couldn't before as I held 25% which is enough to block a special resolution. But now I have 50% so he defo needs my agreement.

Do I trust this emplyee? Yes and no. I trusted him enough to hire him but since then he's borrowed this money behind my back which isn't very honest .and doesn't give a good impression of how he handles his own private affairs. I am suspicious of why this offer has come now. Although I can't see how the sale woudl directly benefit him, as he doesn't own any of the compnay. So I'm wondering what's in it for him and what he's up to . That's why I know I need professional advice

I don't trust the competence of the accountant we have right now. He's also given us some advice about the sale price which doesn't seem right to me. I don't even know the basics about selling a compnay -what happens to creditors and debtors, WIP, cash balances etc

[riksti]

I think it depends on what sort of advice you need. The tax consequences of the sale? Whether the value is fair? - you need an accountant who deals with business valuations and transfers / takeovers. (might be that your own accountant deals with things like that).

Do you feel the contract may be on unfair terms? You need a solicitor. Well, I'm assuming the money offered is quite large so I would suggest talking to a solicitor about the sale if you're seriously considering it. Such business takeovers are usually complex affairs and you need to make sure your interests are protected.

[riksti]

If you're selling the company then everything goes with it (you can usually withdraw your director's loan, though, if there's cash in the company). If you're selling the shares of the company then debtors, WIP, contracts etc all go with the company. You get an amount of money as capital gain and taxed at appropriate rates (may be 10/18/28% depending on circumstances).

If you're selling the trade then it's all sold within the company and you would be holding shares in a company that has a lot of cash in but isn't doing anything. This may mean you have to think how to get the money out of the company.

[ChitchatAtHome]

What happens is up to you and the purchasing company. Sometimes everything is included, other times it's not.

Get yourself an independent accountant that can look at this with fresh eyes, someone like an auditor would be beneficial.

Be VERY suspicious of this offer coming via this employee - it is easy for him to benefit. If the company looking to buy is a private company, then it is easy for their to be a payment for successfully engineering the sale/purchase - even if off the books. He could be promised a more senior position/more money after takeover, anything really.

[AitchTwoOhOneTwo]

no idea about company etc etc but have only just read this and OMG km, you are doing bloody well here. chin up and keep it up.

[KatieMorag]

Yy I'm assuming that there is something big in it for him. It's an overseas compnay and he woudl become CEO of their uk branch. So I'm worried that he is engineering this sale now in exchange for promise of a huge salary increase. The price would be higher dor us if we sold in a few years

We have quite a lot of money in WIP, so I wouldn't want this to be included.

We haven't got anything in writing, so it's not that I think the contract conditions are unfair. More that I need profesional advice as to the pros and cons of selling now vs selling later. and what a reasonable price. Is it a msutilpler or turnover or profit? We are not a big company but are quite profitable, more so than our much larger competitors .

I'm thinking that if we sell the compnay and get a sum of money . If we invest that we will get a much smaller ROI than our current margin . So why sell?

You see why I need some help.......

[KatieMorag]

Thanks aitch

[suburbophobe]

You are living with a people pleaser. Sorry, don't know how to help, except to deal with the finances by yourself.

[AitchTwoOhOneTwo]

for the record i think your dh sounds nice. just wrong. but nice. i really hope this is salvageable.

[AitchTwoOhOneTwo]

people pleasers can be helped, though. and as an eldest i do get that there's no seeing a sibling go without if you have it to scrape together yourself. (obv he extends that beyond family, though, which is barking. but hopefully not irredeemable).

[EverybodysCryEyed]

You said up thread that your DH loves his work - what would he do if you sold?

Your employee has a conflict of interest here and I would be concerned about keeping him in contact with clients etc whilst this process is under discussion.

have you considered using a mid-tier firm - BDO/PKF etc?

[AitchTwoOhOneTwo]

sorry to keep yakking but obv he's also a Big Fat Liar, though, which absolutely has to change, so i hope i'm not minimising his crimes.

[riksti]

I think you need an accountant that is experienced in business valuations then. The way companies are valued largely depends on the sector they are in so it's difficult to suggest what a valuation is based on without knowing a lot more.

To be honest I wouldn't focus so much on what your employee is getting out of this - only on whether you want to sell and what that means to your family. If you can get the price that you want why would you care if he becomes the CEO? (I understand it's easy to say for me since I don't have an emotional connection with the company but you built it up from the beginning. However, if you're selling your business then somebody else will be running it). If you do go through with the sale you definitely need to see a solicitor to make sure your interest (and the loan given to him) is covered as well.

You can't directly remove the WIP if you're selling the shares since the WIP belongs to the company. By selling the shares you are getting rid of the whole company so everything in there will go as well. The value of the WIP, however, should be reflected in the valuation.

[riksti]

Everybody, BDO may be a bit of an overkill if the OP is with a sole practitioner at the moment. A local bigger firm with experience in the area might be sufficient.

[EverybodysCryEyed]

It depends on the specialism and value of the company so sure - but these days you can get pretty good deals on fees (depending where you are based).

I would also do a bit of soul searching on whether or not you actually want to sell before commiting any costs to the process.

I got the impression that dh loves his work and there is likely to be a non compete clause put in place.

[KatieMorag]

We do want to sell but had hoped to do so in 3-5 years. Dh woudl be expected to stay on for a few years, as he's the biggest fee earner in the co. we are a professional services firm

Re WIP, the offer on the table is only 4x WIP, so thats one reason I don't think it's enough. And it's only 5 times our profit . So in others words, if we don't sell but continue to run the business for the next 5 years , we would make as much as we woudl by selling.

Our current accountnat is just a small compnay of 4 or 5 accountants . But I don't trust their competence. Accountant just suggested yesterday that we sell 10% of the business for 75% less than this compnay are offering ( I do realise that 10% of the co isn't worth 10% of the price of the whole but even so)

[KatieMorag]

Riksti- I don't care if the employee becomes CEO of the company . Bit I'm wondering if he's incentivised to sell our compnay at a lower price so he can get a bigger salary down the line. if its a win win situation, that's fine.

We do want to sell. My questions are

Is this the right time?
Is this a good price?
What are the T&C that Dh will have to work under ?

So I defo need professional advice that's independent and informed.

[TheDoctrineOfSnatch]

Op approx where are you (SE, SW etc) - cd help people make suggestions.I

[KatieMorag]

Scotland