EMI Share Options & Valuations

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  • #2522
    businessgrowth
    Participant

    I’m looking at doing a next round of investment but want to take on an employee and provide them Share options under the EMI scheme –

    I want to make sure I do things in the right order so they benefit from an increase in valuation.

    Is the valuation for the EMI scheme influenced by or does it need to be the same as the investment valuation? Could you have a lower valuation justified to the revenue for the EMI process?

    For example if the business at the 1st round of investment was worth £1m then the next round is £2m – to benefit the employee to have the option price be at the £1m valuation does the scheme need to be set up before the next round of investment?

    #2523
    Jonathan Lea
    Keymaster

    Answer is not necessarily. We’ve seen a recent valuation agreed by HMRC at 10p versus investment round price north of £100.00. It depends what your balance sheet looks like and whether an accountant can support a low valuation on paper. An investment round valuation is normally more ‘in hope’ rather than a ‘scientific’ accounting basis and HMRC will know that.

    If you don’t have accountant we have two options of firms that can prepare a valuation report for +\-£1000. Or you can prepare in house and we can give you some know-how.

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