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Share valuation

Produced by Tolley in association with
Employment Tax
Guidance

Share valuation

Produced by Tolley in association with
Employment Tax
Guidance
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This guidance note provides an overview of the valuation of shares in the context of employee reward.

It is strongly recommended that anybody wishing to obtain a formal valuation should get advice from an experienced practitioner.

Open market value

In order to determine the value of a company’s shares in connection with a transaction involving employees, it is usually necessary to determine the price that a willing buyer would pay a willing seller, assuming that both of them have full knowledge of all information that is publicly available at the time of the sale.

One factor that must be taken into account is the size of shareholding. It is generally recognised and understood that where somebody has a very small uninfluential shareholding that this is worth considerably less per share than a controlling shareholding.

As an example, while some shares that form part of a 100% shareholding will clearly be worth the appropriate percentage of the whole value of the company, if an employee is offered 0.01% of the company’s shares, they will not have any significant

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Stephen Diosi
Stephen Diosi

Head of Employee Incentives, Mishcon de Reya LLP , Employment Tax


Stephen leads the Employee Incentives team at Mishcon de Reya. He has significant experience advising on the strategy, design, implementation and compliance of UK and global employee incentive arrangements, including long term incentive plans, all-employee share plans, HM Revenue and Customs tax-advantaged plans, management incentive plans and growth share and joint ownership plans. Stephen also advises on all related corporate, tax and trusts aspects, corporate governance issues, disclosure of directors' remuneration and share dealing regulations.In addition, Stephen works with companies on the impact that corporate actions have on their incentive arrangements and has acted on many public takeovers, mergers and acquisition, public to private transactions, initial public offerings, capital raising activities and private equity deals.Stephen also advises on contractual disputes and tax investigations relevant to incentives arrangements.Stephen works with a wide range of businesses across several industry sectors, including financial services, natural resources, entertainment, aerospace and transport and for companies that are listed on the London Stock Exchange, AIM and overseas exchanges, together with private equity houses, private companies and owner-managed businesses.

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