Our Client was a director/shareholder of a privately owned consultancy limited company, where along with his business partner they owned the business on a 50 : 50 basis.
The consultancy was at a turnover of circa €1.0m per annum after years of growth, with an established client base within multi year contracts in place.
The business had been built very successfully over a number of years by the two director / shareholders working closely together. They had grown the client base, secured long-term contracts, and developed a profitable business with further potential ahead.
Internally, responsibilities had naturally divided between the two individuals:
That arrangement had worked very well while both directors remained aligned and “on the same page”.
The situation changed quickly when one of the director / shareholders unexpectedly decided that they wanted to leave the business, presenting a valuation for their 50% share, and looking to move forward without delay.
For the remaining director / shareholder, this created immediate uncertainty. The decision itself was a complete surprise, how to respond was unclear, and the valuation of the business was very difficult to assess.
To add to the challenge, there was no Shareholders’ Agreement in place, and therefore no agreed process for valuation, exit, or dispute resolution.
At that point, what had been a successful working relationship between the two directors became a potentially difficult, damaging and personally challenging situation.
The involvement of Sakura came from a historical relationship with Damian Connolly, so our Client reached out for an initial discussion on where or how to start.
The first step was to bring some clarity to the situation:
Once that was established, the next step was to obtain a written outline of the departing director’s valuation and any other requirements, to set out an initial framework for discussion.
From the outset, two risks were clear:
The priority, therefore, was to keep discussions focused and professional, manage expectations early, and accept that while not every point could be won, progress would depend on maintaining focus on the bigger picture.
The starting point was a practical review of the financial information of the business, to determine whether the proposed valuation was broadly reasonable, and to identify any financial issues that might require attention.
What we identified was that:
This provided a number of points for informed negotiation.
Rather than rejecting the proposal outright, the approach became one of structured discussion — accepting the general range while using specific points to achieve the outcome.
Over the following months, the process progressed through a combination of negotiation and compromise. Some issues were pushed back on, while others were allowed through to maintain momentum — always with the ultimate aim and “bigger picture” in mind.
Alongside the negotiation, practical steps were taken to enable the buyout to complete as simply as possible, including considering funding options such as overdraft facilities and external finance.
Tax considerations were also addressed to ensure the share buyback was structured efficiently.
As expected, the relationship became more strained, particularly around post-exit expectations. However, after approximately six months, the exiting shareholder left the business with a broadly acceptable outcome.
The remaining shareholder moved to full ownership and retained control of the business — and importantly, the situation did not drift into prolonged dispute.
In the short term, there was some pressure on cashflow following the buyout. In the medium term, however, control remained with our client, who could now pursue future opportunities without constraint, and the underlying value of the business remained intact.
This is not an unusual situation.
Many businesses are built on strong personal working relationships, but without formal agreements in place for when circumstances might change.
A Shareholders’ Agreement will not prevent disagreement, but it provides a framework for how situations like this are handled — so that they do not become drawn out and damaging to the business.
More broadly, situations like this highlight the value of having experienced financial and commercial advice at the point it is needed most — particularly where valuation, negotiation and structure all come into play.
TAKE THE NEXT STEP
If you are in business with others and have not formalised how a departure might be handled — for example, through a Shareholders’ Agreement — it is worth addressing this while relationships are still strong!
If you are already facing a situation where a shareholder is looking to exit, the priority is to bring structure, clarity and a level of professionalism to the process as early as possible.
If this feels familiar, or if you would simply like an outline of how or where to start with your business then
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Email: info@sakurabusiness.ie- Phone: 085 702 0949 - Privacy Notice
By FDRY
