For many investors, businesses are a great way to use existing capital to make more money. An investment you make in a business when it becomes a publicly-traded organization or first starts up can pay dividends for years to come. As long as the company generates profit, you can expect to receive a portion of that windfall as a shareholder. Unfortunately, there could be situations in which your income or even the capital you invested in the business is at risk.
Maybe you are a shareholder of a large and seemingly successful company, but a top executive has just informed shareholders of the company’s surprisingly low valuation at a quarterly meeting. They may use this low valuation as an excuse for low returns or no returns on your investment, or there may be discussions of making financial moves that could impact shareholders.
If you don’t feel like the valuation for the business is accurate, you may feel like you cannot reasonably discuss decisions for the company or its assets. What can you do if you seriously question the accuracy of a recent business evaluation?
Consider performing your own valuation
The information that you have as a shareholder can give you insight into a company’s operations and its assets. You may be in a position to create a rough evaluation of your own or even to work with a financial professional to establish a more realistic estimate of what the company is worth and how much revenue it will produce in the immediate future.
The figure you reach could give you a persuasive argument against questionable business decisions or be a starting point for a difficult conversation with other shareholders.
Discuss your concerns with others
The chances are good that you are not the only shareholder with questions about the company’s recent announcement or business valuation. You certainly have rights as an individual shareholder, but it will be much easier to take effective action if you cooperate with others who also have a vested interest in the company’s ongoing success.
Addressing either the inaccurate evaluation figures provided by the company or a lack of transparency can help you push for better management and hopefully better return from the company in which you have invested. Exploring options for resolving disputes as a shareholder will help you navigate the complicated rights you have as a partial owner of a business and protect your interest in the company.