Currently own private company stock valued by an independent 3rd party and approved by the board at $10/share. I have a purchaser willing to purchase my shares at $5. Since they will have no rights upon purchase they are not willing to pay full value. Company has right of first refusal and could purchase for $5. However they have twice in the past purchased shares outright (not under the right refusal right) at a price equal to the independnet 3rd party/board approved value. Do I have a case here as far as hiring a lawyer on a contingency fee basis to get the difference between $5 right of first refusal price and $10 fair value?

Hello p:

It's a RIGHT - not an OBLIGATION. Plus, you'll NEVER get an attorney to take this case on a contingency.

excon

... Since they will have no rights upon purchase they are not willing to pay full value. ...

Please explain what rights those are, and why the would not have them.

Also, what is the basis of your thought that the company may somehow be obligated to purchase your shares.

Apologize if I was not clear. When I say the purchaser will have no rights I mean that no preferential rights (Board representation, observer seat etc.) and they will be minority shareholders in a private company. My premise is not that the company would be obligated to purchase my shares. My premise is that if they exercise their right of first refusal at the offer price of $5, which is a price well below the independently determined and board approved price, and they have paid to others that price in the past, do I have a legitimate chance to compel them (via legal means) to pay me the $10. Also should mention that given the volume of shares, we are talking about $1M left on the table so that would seem to be enough to interest someone in a contingency case, but not sure there is a case.

Apologize if I was not clear. When I say the purchaser will have no rights I mean that no preferential rights (Board representation, observer seat etc.) and they will be minority shareholders in a private company. My premise is not that the company would be obligated to purchase my shares. My premise is that if they exercise their right of first refusal at the offer price of $5, which is a price well below the independently determined and board approved price, and they have paid to others that price in the past, do I have a legitimate chance to compel them (via legal means) to pay me the $10. Also should mention that given the volume of shares, we are talking about $1M left on the table so that would seem to be enough to interest someone in a contingency case, but not sure there is a case.
"$1M": does that mean $1 million or $1 thousand? Former: oh yes. Latter: very doubtful.


Two issues:
1. your independently appraised (valued) price: Is that appraisal accurate, considering the fact that others have been paid more?

2. exact wording of the right of first refusal: how is the price to be determined?

Hello again, p:

You have no case. Notwithstanding your previous sales OR your recent appraisal, the fact that you're considering selling at $5, means the stock is worth $5. Otherwise, why would you sell it?

Beyond that, if there IS a profit to be made, the corporation has reserved that profit for itself by entering into a "first right" agreement with you. They certainly didn't write that agreement to guarantee YOU a profit at their expense.

Those are TWO HUGE reasons you don't have a case.

excon