The value of staff options is also determined by the conditions that apply for allocation and exertion thereof. Often, those depend on the performances of the enterprise and that of the respective employee.
The value of a block of shares cannot always be set equal to the equivalent or pro rata parte value of a 100% interest. The valuation of blocks of shares, and especially that of minority blocks, requires a precise analysis of specific stipulations with regard to say, exit arrangements (e.g. ‘good leaver and bad leaver’) and possible certification of shares. The possibly limited say in connection with a block of shares, but also so-called ‘tag-along’ and ‘drag-along’ stipulations, can have important implications for the trade-ability of minority blocks as well as the value thereof. Sman Business Value provides structured insight in those aspects of value.
Within our firm the knowledge and experience are available in order to advise you properly on employees’ participation and the valuation of staff options. We can also advise you on possible regulations for employees’ participation. Sometimes we thereby opt for applying a simplified valuation formula. We can indicate what the advantages and disadvantages of the various methods are. Thereby should be taken care that the outcome of such a formula is still related to the economic value of the respective shares.
