This post is about one of my 45-second pitches at my BNI Chapter, BNI City Business. You can read the introduction to this collection here.

17 November 2023. I needed to make some last minute changes to my slide sequence as I decided to move a planned series to the New Year. I needed to come up with something quickly, and for it to align with this week’s theme: “What the most challenging thing you have experienced or learned in your business in 2023?”

My message this week was around being aware of things you can’t easily see. Specifically, I shared the fact that in most cases, a minority shareholding in a closely-held New Zealand firm was basically worthless if you can’t find an internal buyer. Who is going to buy a non-controlling interest in a small business? Buyers are very hard to find. Even a 50% stake – where the other shareholder has a similar 50% stake – is still a non-controlling interest in most cases.

I chose this topic not because it was challenging for me, but because it is always challenging for clients to hear. If you hold 40% of the firm, your shares should be worth 40% of the firm’s value, right? In theory perhaps, but in practice, no. When valuing a minority shareholding, the valuation analyst will need to apply a discount for lack of control to the minority stakes. This is in addition to any discounts for lack of marketability that get applied to the firm as a whole.

I thought it was an important message to share, and I think I was able to shoehorn the meme into it. Not sure the graphic was clear enough for everyone based on the muted response. Maybe it’s just my sense of humour.