Engineering career/general life advice... [Archive] - SV650.org

yorkie_chris

09-11-13, 09:02 PM

OMO!

So, I'm sat here, 25 years old, in a cracking little (rented) bungalow/flat type thing with an awesome girlfriend and a family I get along well with... overall, it ain't half bad.

However, work wise, I feel like I'm doing it wrong as I don't feel like I'm getting any further forward in life, no real chance to save up much money.

Qualifications wise, I've got a 2-2 BEng hons in Mechanical Engineering from Leeds uni.

I'm currently working 4 days a week for a small firm (6 people, about 1.2m annual turnover). They set me on agreeing to the 4 days so I could keep my side business with the bikes etc.
I quite like the work, I've designed some pretty interesting stuff for them (Solidworks, solid edge and autocad) including a couple of really interesting ground-up projects that I've had pretty much free reign with.

However, the money's pretty poor I think, about £8/hr after tax.
I was earning significantly more as a fitter building can making machines... £10/hr plus loads of 1.5x overtime.
And also, it's salaried, so no plus point for those days when I'm still in Stoke or Jarrow at 5pm...
(though they are reasonable with expenses on longer trips)

I've been there 18 months.
FWIW I'm an associate of IMechE, got to be getting towards enough experience to try for IEng status. Should I?

As for the firm, well it's healthy, decent turnover, reasonable sales. The problem is the staff... the MD and his wife are pushing 70. Their Son (new MD soon) is 50 or so and is an effective salesman and a reasonable designer, but I don't think takes enough interest in the nitty-gritty, the HMRC stuff and the rest. There's another guy responsible for technical sales, brings in a big chunk of the turnover, he retires in 6 years. And then there's me! (there's also a van driver/gofer and a younger lady who helps with accounts)

So to sum up this slightly tedious and rambling diatribe...

Short term am I getting screwed doing a professional engineers job for apprentice salesman's wages.
Long term what are the thoughts about the "changing of the guard" from old to new.

DarrenSV650S

09-11-13, 09:11 PM

I earn more than you and all I did was go from school to an apprenticeship. I thought a uni degree would get you further

Speak to a careers adviser.

timwilky

09-11-13, 09:17 PM

thefallenangel

09-11-13, 09:19 PM

I am almost in exactly the same boat.

2:2 in Electrical engineering, time served apprentice on 33k a year on a salary with company van. Stuck in a massive hole.

Got turned down by Nissan for a job which would of paid more for less and can't become a "graduate" because i lose at least 10k so i am trying to get a good job on the tools where I can become chartered on the tools.

My personal advice is try Nissan for a fitters job and see if they will take you across if you can move to sunderland. A fitters job on the tools for 4 on 4 off shifts is 38-45k if you want cash with overtime on top. I would say there's no length in staying where you are and nissan will fund mileage and hotel for you. I am trying to get out of a cushy number to actually get on.

Being 25 with a degree atm in engineering isn't a good thing. Sadly

yorkie_chris

09-11-13, 09:22 PM

I'm not time served or any practical qualifications for that, but seriously 38-45k as a fitter?

garynortheast

09-11-13, 09:24 PM

The money does sound poor for your level of qualification and ability, but you seem to be doing work you find interesting and enjoyable. It may be that you need to decide what your priorities are - higher income or job satisfaction. It can be quite hard to find work which gives you both. A higher income can help to alleviate the drudgery of a crap job, but personally I'd rather be doing something I find fulfilling even if it's not going to give me a large financial reward.

thefallenangel

09-11-13, 09:25 PM

http://careersatnissan.co.uk/nmuk-sunderland/development-benefits.html

add 40% shift allowance to the fitters wage. And to make it worse they are jumping straight to the oil rigs for more again.

maviczap

09-11-13, 09:29 PM

What about working for Bentley? Not that far from Stoke, Quiff works there & one of my colleagues brothers.

They could find out if there's any jobs going

Down here, the port has a big engineering section, so how about something similar

yorkie_chris

09-11-13, 09:31 PM

(stoke was just an example of where I end up btw)

Well yeah that's the thing, it's relatively interesting and relatively enjoyable... And it's not exactly hard most of the time, I get enough time to look at stuff on the side for example.

And actually at the end of the day I like the people there, I don't want to walk and leave them in the sh*t to be honest!

Do people see any value at all in the fact that if I stayed for 5 years or so I'd be one of only two people who actually know what they're doing in a 1.2m a year company? Or is that more likely a millstone than an asset.

Bibio

09-11-13, 09:45 PM

is there a future for you in the company you are with at the moment?

what would you prefer to do and what are you qualified to do. basically mechanical engineer is pretty vague. it would be better if you could 'specialise' your title.

at the moment your getting less than a shelf stacker at Aldi.

like a lot of graduates it's pretty hard to find a job that you are actually qualified for and most end up doing jobs that are completely different, a university degree to an employer only shows that you are 'dedicated' more so that the average Joe. at one time it meant something but now with so many graduates leaving uni the employers have their pick so don't have to pay the wages they once used to. not all graduates are capable of doing the job they have been trained for and a lot of the ones i was at uni with were complete useless wastes of space when it came to actually putting their learning into practise but a fair old few went on to get very good jobs which says a lot about the current climate of so called qualified individuals in the UK.

do what feels right as it usually is.

BTW i'm not the person that should be giving advice as i have stuffed a fair few 'chances' in my life that would have seen me on a very very good income.

andrewsmith

09-11-13, 09:47 PM

The problem is Chris, Engineers are a much maligned species in this country. The title is generic for the guy who repairs your washing machine. FFS we even have computer engineers who are nothing more than software installers etc.

I have said it before to you Chris. I am afraid you need to be prepared to be mobile to get those plum jobs. We employ some very clever guys specialising in blade design etc. A huge number of these specialist engineers stuggle to speak English.

I'll agree to that. I take the **** out of a tenant at work for some of their job titles. A sky fitter is an engineer for Pete's sake
Thats a point that annoys me, so glad the FM company we deal with are quite old school

I'm not time served or any practical qualifications for that, but seriously 38-45k as a fitter?

Yeah, thats what the good ones earn at Nissan
A time served fitter at the FM company we use at work earned over 60k in 2011. Which was as much as the director of the FM office

Bibio

09-11-13, 09:51 PM

And actually at the end of the day I like the people there, I don't want to walk and leave them in the sh*t to be honest!

if you want to work for peanuts then you will never be short of a job.

ask them what the prospects are for you staying with the company and going full time. they might be paying shizz wages as they suspect you might just up and leave.

kaivalagi

09-11-13, 09:57 PM

I believe if you want to progress with your career you may well need to get involved with some other companies to have some varied experience to strengthen your "portfolio"

I have a 2.1 BEng in Electronic Computer Systems and a Postgrad Dipl in Telecomms and Networks and ended up going into software design instead of the hardware side of things. It wasn't until I got made redundant in what I thought was a great long term prospect that things actually got a lot better for me. After having 10 years experience of analysis/design/architect/tech pm work I now have my own company contracting out my skills and haven't had any long spell without work ever...sometimes I do need to travel a fair bit and stay away for a few days at a time but sometimes I can work from home with flexible working hours etc

If you want something similar I'd suggest you get some varied experience by working for several places over the course of a few more years, each time commanding a better wage for the new job...if you stay in one place you wont get the pay increases you deserve (for the most part). Once you have some in-demand skills and experience then look at consultancy jobs maybe?

Or.....If it's more about just getting some more wages for the foreseeable I would speak to the company telling them that you think you are being totally underpaid for what you can do and that you are seriously looking at alternatives....chances are if you are the only decently skilled guy there and the business wouldn't work well with you gone they'll think about doing something for you...then take it from there maybe?

Hope that helps

yorkie_chris

09-11-13, 10:03 PM

Bib, At the moment, it says project engineer on my card. However that's not to say I have the responsibilities that a project engineer in a larger company would have.
They set me on on a starting wage, probably thinking just that. But I've invested my time in learning the job so that would hopefully give them some confidence.

Kaivalagi, I'm planning on having a chat with them when a recent project is finalised. (especially if the customer orders a couple more) as they were practically having a happy-w*nk over it and it's all my work really.
They've mentioned commission on further sales of that item... but not mentioned numbers yet.

Bibio

09-11-13, 10:12 PM

ahhh the commission. what that actually says is take a carp wage and top it up.

no bad thing TBH as i had a job that was just that at one time, i made shizz loads on commission.

keeps you keen keeps them happy and in times of slack work keeps their business going.

thefallenangel

10-11-13, 09:13 AM

I've just applied for a job doing what i actually enjoy doing within my job full time. I'm just worried that it will make it boring day to day.

maviczap

10-11-13, 09:30 AM

YC, you've got transferable skills and you're getting to that point in life where you'll be wanting your own place.

At £8 an hour you're not far above the minimum wage, so if you don't get a boost in wages soon, I'd be transferring my skills to a better paid job, otherwise in 5 years time you'll still be in the same position.

I understand your loyalty to them, but loyalty isn't going to pay a decent enough wage to get you a mortgage.

timwilky

10-11-13, 10:43 AM

yorkie_chris

10-11-13, 10:50 AM

I'm sure there's massive potential in that and since starting diving I'd be really keen to move closer to the sea.

But anyway, the general consensus seems to be definitely underpaid and do something about it.

(not that I really needed telling, but I'm sure you all know how easy it is to find yourself plodding along in the status quo)

Specialone

10-11-13, 11:21 AM

Chris, looking back I wish I'd have chose engineering tbh, I've worked in engineering roles even though I trained as a chippie, I had a role in the last place the same as a qualified engineer would have but I was lucky as I had a manager who knew I could do the job, but I had opportunities come up occasionally that would've gained me better roles had I been qualified, but hey ho.

When I was your age they were crying out for fitters, engineers etc in Brum, you literally could walk out of one in to another, there are still engineering jobs down here in abundance but obviously no use to you.

Anyway to answer your op, your employer is taking the **** with your wages and they know it, as mav said, thats just above minimum wage, they couldn't get anyone as qualified as you for even close to that if you left.

I would politely ask them for the going rate (take in evidence from websites what that is), worst they can do is say no, then I'd like to see them replace you for that money.

Although not the best work I'd try and get some work in automotive engineering, looks good on the cv, be valuable experience too.

Dave20046

10-11-13, 12:25 PM

The problem is Chris, Engineers are a much maligned species in this country.

It's not even as specific as that, I'm of the opinion getting good work in your 20s in this country is a bit of lottery.
Of all my friends who have high degrees and further I can't think of a single one working a job in their chosen career bar the ones that have been forced to move to London. Even my sister stayed in education until she hit 30 and landed a decent job.

There are exceptions to that rule , I know a couple of forummers who are. I think your best bets focussing on your own business chris, it'll be knackering bhut working it up to a level where you can be self employed full time would be interesting (assuming there's money to be made) . Employers seem not to appreciate degrees yet do expect them. Ridiculous extreme example;I know my md refuses to employ graduates as they're too 'studenty', which is an unfortunate trade off ; yes the ones that come inboard with no knowledge don't know any better but we're missing out on a good skill set and 'someone' then has to build up a foundation background knowledge with any new recruit before they're of the vaguest use. .. They need to stop putting Alan sugar on tv...

On a more uplifting note we can be assured in this country that we have the highest qualified barista's of all!

Amadeus

10-11-13, 01:30 PM

I haven't got anything useful to add but I wish you well. People here very much respect but it's adding value to an organisation that brings money. As others have said, the worst that they can do is say no; almost certainly they won't bring you up to the going wage in one go. The most realistic way to get a rise would be to change employers I think.
Do you use your degree for your job?

timwilky

10-11-13, 01:34 PM

I suppose in today terms i was quite lucky. i started an apprenticeship at Leyland trucks (alongside 300 others) back in 76 and 6 months later as people were being allocated to their trades, I became a technical apprentice. Age 19 with an C&G then ONC completed, I had a choice HNC or degree. i was sponsored to to my degree. but because I had my vacation employment back at Leyland, they classed me as also completing my apprenticeship.

Imagine that in todays world. A full grant as I had worked for 3 years before my degree, so no parental income consideration, sponsorship, full rate vacation employment, access to works labs and computers and best of all a full rate job to walk into. No need to do their graduate program.

So age 22, I was working as an R&D engineer and 2 years later became their youngest ever senior engineer. A year later got out of it as I saw the writing on the wall for Leyland and how much better IT job and salaries were.

I am from an era where the country and employers valued an educated workforce. These days with degrees in yogurt weaving being the norm, a degree no longer hold the kudos it did when I was chris's age. My own daughter has a degree in law and a masters in contract law. and earns little more than 20 grand as a legal exec. There appears to be little future for todays graduates, they need to grab any job. The dream ones don't exist any more.

yorkie_chris

10-11-13, 01:53 PM

Agreed about the value of a degree, still I think the portfolio of stuff I've designed and built is worth more than my degree now anyway.

On the other hand my experience in a small firm, is not as easily transferable to a large one? And also, do I want to work for a big corporation and have to deal with tw*ts of accountants and HR managers?

I haven't got anything useful to add but I wish you well. People here very much respect but it's adding value to an organisation that brings money. As others have said, the worst that they can do is say no; almost certainly they won't bring you up to the going wage in one go. The most realistic way to get a rise would be to change employers I think.
Do you use your degree for your job?

Well, I intend to ask and we see what happens.

Yes I use my degree and also (more so!) the skills from a life of p*ssing about with stuff.
The usual small firm thing of doing a bit of all sorts... sales, measuring up, designing stuff and fitting it.

However the real interesting bit is the design work, some quite interesting stuff from some really big companies, and that's where the value is. Any daft tw*t can answer a phone and take an order for a £20 part and I've got zero interest in this side of it.

kaivalagi

10-11-13, 01:56 PM

These days with degrees in yogurt weaving being the norm, a degree no longer hold the kudos it did when I was chris's age.

Ain't that right, as everyone can get a degree in yogurt weaving these days it belittles the graduate status, even if you're a graduate with a decent degree and classification it doesn't hold the kudos it should.

Having the experience is what really matters now.....Chris, I think getting the decent big industry experience however you can is the solution for you...

orose

10-11-13, 03:42 PM

I'm not in the same field as you, but I do see a lot of similarities between what you've said and my early career path. As a result, I'll give you the advice I wish I'd had 10 years ago, and that's to not be worried about what will happen if you quit. The grass may not always be greener, but it does usually pay better.

The first port of call is to see your current boss and tell him/her what you're thinking, because if they actually value you they will try and keep you for your domain knowledge. At the same time, have a look in the market and see what jobs with your experience level are paying elsewhere, so you know how far you can push without being unreasonable.

andrewsmith

10-11-13, 04:47 PM

I am from an era where the country and employers valued an educated workforce. These days with degrees in yogurt weaving being the norm, a degree no longer hold the kudos it did when I was chris's age. My own daughter has a degree in law and a masters in contract law. and earns little more than 20 grand as a legal exec. There appears to be little future for todays graduates, they need to grab any job. The dream ones don't exist any more.

I agree with you on that Tim, its eroded the principle of a degree.

I'm another with whats classed as a 'red brick' degree (The Engineering, Sciences/ Maths, Construction fields), and the amount of jobs in my field I applied for and was against people with degrees in English Lit and sociology was stupid.
I qualified as a Building Surveyor, like engineering is a specialised degree.

It took me 2 years to get a permanent job working in a related field (Facilities Management) to my degree.

Eulaca

10-11-13, 04:57 PM

YC, I don't know if you'd want to move from Yorkshire, but places like Triumph are always hiring. I've got a few friends who got jobs there straight out of uni.

dizzyblonde

10-11-13, 06:01 PM

Anything is achievable, with or without a degree.

In order to progress in a career, you need to ask yourself certain 'life' questions, along the lines of

What are your long term goals?
Where do you want to be in 2,5,10 years time?
What would you like to be doing in 2,5,10 years time?
How much experience do you have in your chosen field to use for further career enhancement?
Are you brave enough to step outside Yorkshire?

The list goes on. Can you answer any of the above?

Experience is key, the more jobs under your belt the further you get. The more money you can ask for, the higher up the tree you go.
Regardless of being 'loyal' to a small firm, the big names are the ones to go for. International firms are even better. Small firms can't always offer the money or career incentives .

Wages within Yorkshire are rubbish. Personally thinking, 4 days a week at 8 quid after tax is about right for the region especially regarding age, and experience. Degree... Not knocking but its average. You need to fight harder to attain what you want. There's better qualified out there. Start looking further afield.

I've a very good friend who started with no qualifications. Still not sure what he does, but in recent years he's used big firms to train him, step ladder through from Drax, to Southampton and currently the Shetlands. Hard slog, sacrifice and a lot of moving about to achieve the wage he wants, and the career he wants.

LewSpeight

10-11-13, 09:11 PM

I'm already on more than that, Chris, as a lab manager. And I'm 19 and don't have a degree.
I'd certainly at least push a payrise.

10-11-13, 10:19 PM

Chris

I know we are looking for Mechanical Engineers. But i am afraid in Bristol. Ansys, Pro-E, Tidal Bladed, Fluidity etc.

It is a business that is only a few years old so nobody has decades of experience to compete with. Tidal Turbine Generators, we think it will be growth market and currently have a 1MW research turbine in the water. and need to move from research into industrialisation, development and production.

Definitely good to pick an up and coming industry. Most renewable businesses are up and coming and a good bet. Limited people have experience, and you can progress quickly.

Will just depend on whether you want on the tools in the field, or in the office designing / managing.

I manage a team of 20+ field based people, not one of them earn less than £70k, some of them have bugger all in terms of professional qualifications.

I'd suggest looking at either wind or tidal. Wind has been around for some time and will be tougher to get into, depending on what decisions the government make in December could mean a **** load more work until 2025. The company I work for has just started investing heavily in tidal technology recently, and they have never been wrong in 100+ years of business decisions.

yorkie_chris

11-11-13, 09:25 AM

Owenski

11-11-13, 09:57 AM

I think we graduated the same year if not a year apart and its amazing how all the way up to getting the degree everyone insists you need it to "open doors" and "better yourself" then when you get it you get a distinct feeling of all those doors slamming shut and those able to put you in a position to better yourself turn their back.

No one ever feels they're paid enough, I'm learning that now. Even the ridiculously overpaid think they deserve more. Just reading the above I've not noticed anyone discuss the short time you're working. Assuming you're company works a typical 40hr week then the annual salary for that position would be around £21k based on what you wrote.
Because you work 20% less than that by missing a day it takes you to around 17k before tax deductions. From an employers perspective you cant judge your role on a 17k salary, as its actually a 21k position now I don't know what a salary for someone in your field should be but its worth considering the above before marching in to the gaffer and whacking your testis on the desk.

If you're doing a job which could/should be earning 30-40k then by all means leave, they may be lovely people but don't think for a second that if times were hard for them they wouldn't cut you loose to better themselves, quite simply they would.
You've listened to me and bert **** and moan about our jobs many times over we're both underpaid but both have reasonable packages which offset the miserable salary. Namely we had uni fee's paid, were permitted 39days off work a year to attend uni and still made a salary ontop of that.
Not to say you're blinkered but make sure you're eyes are open the the full package and not just the take home.

Failing that if you want to earn a large salary whilst in addition getting 65 week days plus weekends a year as leave then turn to teaching... I'm seriously considering it starting a School Direct Training in Maths/Physics as that'll pay me £15k during the year it requires to train.

http://www.education.gov.uk/get-into-teaching/funding/postgraduate-funding

Specialone

11-11-13, 10:47 AM

Even based on a 40 hour week, even knuckle dragger fitters (which I know Chris ain't) earn £12-£15 an hour before tax, £10 an hour is **** poor for an engineering role.
I suspect Chris could sign on with an agency and command more than that quite easily.

Bloody aldi pay their till ops around £8.50 per hour, something wrong there don't you think? (fair play to aldi, not knocking them btw)

ClunkintheUK

11-11-13, 04:41 PM

Berlin

11-11-13, 05:09 PM

I apolgise for not having red the whole thread, its a busy morning.

Chris (et al) I found that everything you do up to the age of 27-29 is for fun. Everyone I know landed in their ideal situation between these ages. This is when you'll drop into what you're supposed to be doing. So until then, have fun. Use this time to get yourself into a position so that something exciting will present itself when you're about 28.

If you get to 30 and you're still not having fun or doing something to stir your juices... you're doing it wrong and should IMMEDIATELY change course to do what you want to.

Think of it this way. If you won the Lottery and had a couple of million in the bank and didn't have to work. What would you choose to do to keep yourself busy? What job would make you blissfully happy if you weren't working for the money?

And then ask the question, why aren't I doing that job now?

You are only limited by your own imagination and the amount you actually want it. So want it 100% and it'll happen.

Go and do it...

C

thefallenangel

11-11-13, 08:13 PM

The guy who taught me as an apprentice has now taken a staff job on 30k a year but he's 40. Been sat around doing not a lot and realised he had to get on but enjoyed the good money on the tools. Now the money is going he's jumped ship so look around.

barwel1992

11-11-13, 08:34 PM

as you know Chris im also in the industry

im 21, have no degree, no official CNC training just what i have taught my self, no real engineering qualifications, self taught on Solidworks, the only thing i do have is some CAM training

i do designs, program and run 2 VMC's, i do a fairly good job for the experience that i have (although as you have seen some of my stuff your better qualified to comment on that)

work 9 till 5 with half hour lunch, and i take home around £7.5h after tax so £17000 a year before tax im on a salary but never work past 5...

i have been looking at jobs and i'd say with your experience in my neck of the woods you could be on between 25-40K a year easily

from your brief description of where you work, sinking ship comes to mind

Ruffy

11-11-13, 08:43 PM

YC,

I work at National Grid and we are frequently looking for good technical staff and currently have a few opportunities knocking around. It'd be worth checking out our technical training programme (http://www.nationalgridcareers.com/Development-Opportunities/Engineer-Training/The-Programmes/) either to give some serious consideration (not necessarily too late yet at 25!) or just to help you calibrate your expectations/aspirations. Compare with the graduate programme too, although that's less vocational/hands-on and more general business focussed (think CEng rather than IEng initially). A lot of our upcoming work is associated with connection of new generation, including offshore wind and new nuclear, so lots of potential for coastal proximity!

Hope that doesn't sound like a sales pitch - I am an Engineer by background (Leeds grad too, but next door from Elec Eng). Just wanted to give you something to consider and compare against - big corporate context if you like. Life in a big organisation isn't perfect but it can be a great development and foundation environment. Happy to bounce some PMs for further advice if it helps.

Alternatively, what are the odds of you being able to take over your current company in a few years and keep it going when the "old guard" retires, assuming they won't just wind it up and leave you all in the lurch. MD of a technical niche SME at 30 isn't a bad career ambition and would possibly tip the balance of your remuneration significantly in the above average direction!

11-11-13, 09:06 PM

Tim, G, how would you rate my chances in such a field given that my experience isn't in software based design and CFD?

I'd love to work with tidal power for no reason other than I'd like to move near the sea!

I can only speak from a wind perspective, and based on the information you have provided so far... But I'd have thought with the right cv and a good attitude at an interview you could easily walk into an offshore technician role doing either commissioning, or mechanical and electrical completion work. This could lead to level 7 or installation lead type management role. Would be 2 on 2 off rotations anywhere in the world though.

If tht interests you I could give you more details.

Dave20046

11-11-13, 09:24 PM

Definitely good to pick an up and coming industry. Most renewable businesses are up and coming and a good bet. Limited people have experience, and you can progress quickly.

Will just depend on whether you want on the tools in the field, or in the office designing / managing.

I manage a team of 20+ field based people, not one of them earn less than £70k, some of them have bugger all in terms of professional qualifications.

I'd suggest looking at either wind or tidal. Wind has been around for some time and will be tougher to get into, depending on what decisions the government make in December could mean a **** load more work until 2025. The company I work for has just started investing heavily in tidal technology recently, and they have never been wrong in 100+ years of business decisions.
G, you make me sick
Xxx

yorkie_chris

11-11-13, 11:01 PM

Alternatively, what are the odds of you being able to take over your current company in a few years and keep it going when the "old guard" retires, assuming they won't just wind it up and leave you all in the lurch. MD of a technical niche SME at 30 isn't a bad career ambition and would possibly tip the balance of your remuneration significantly in the above average direction!

Well that's what I'm thinking might be the case and I need to discuss with them. Don't think there's much chance of MD as the current deputy (MD's son) is late 40's so plenty years in him yet.

However will leave basically me and him who have any technical background left in the company in 6 years when the current MD+wife and our technical sales bloke have all retired.

Don't see any reason they would wind it up. Business has the building owned outright but significant value in the order book and contacts.

But fook knows how that applies to me. I can't invest in it, and what would it be worth book value? 2 million? Would there be any point owning 3/5ths of fook all of that when nobody else would buy the share. If you've got any knowledge of the permutations on that side of it I'd love to know more about it as I have no idea.

12-11-13, 12:20 AM

Oh I forgot turbine service technicians too... If you enjoy working on bike still then our turbine are not a whole lot different except the filters and bearings your replacing are the size of a car, and situations where 5nm of torque is the difference between a bearing torqued to 2000nm lasting 1 year or 20 years.

ClunkintheUK

12-11-13, 08:36 AM

But fook knows how that applies to me. I can't invest in it, and what would it be worth book value? 2 million? Would there be any point owning 3/5ths of fook all of that when nobody else would buy the share. If you've got any knowledge of the permutations on that side of it I'd love to know more about it as I have no idea.

You said earlier it had a revenue of around 1.2m so rough rule of thumb (and this is very rough, as there are many factors) is that the company would be worth about 1.2m to private equity/VC firms, though they would be looking for growth potential before they would be interested.

If that is based of off two people's technical work, you and the son, that would put you in a very strong position if the MD wanted to sell. There is no way that PE would be interested if half the firepower behind the company walked or might walk. The way you'd gain a share is to use that, PE might even want to use it to tie you into the company. Might only be 3-5% of the equity at that stage, but at 30-35 its not bad.

yorkie_chris

12-11-13, 01:32 PM

But would a share have value? Except maybe the people who sold it me in first place...

Would the same value be better off put into some property to rent out instead?

ClunkintheUK

12-11-13, 02:23 PM

It would. It would not be a liquid value, like BP shares or any of the FTSE 100. but exactly the same concept. They would probably put a clause in that you couldn't sell your share without giving them first refusal, or you would forfeit it if you left the company in the first 4 years of them buying it.

So say they bought it for £1m and gave you a 1% share as a key person. To fund this they (through the company) took out £500k of loans (which is the starting point for most leveraged finance). The company is 'worth' £1m but has £500k of loans on its books, and £500k of equity. You own 1% of this equity worth £5k, your share.

In 4 years time, they come to sell the company for £1.3m (30% increase in value) and they have used cash generated by the company to bring the debt down by 200k. So of the £1.3m, 300k pays down the debt and there is £1m of equity (a 100% profit for the owners). Your 1% share is now worth £10k. which is at 25% annual return. If they take cash out of the business, say £100k then you will receive £1k.

Once you have the share (assuming no forfeit for whatever reason) they cannot stop you selling it, not legally anyway. If they sell the buyer has to match that price for all shareholders, though you can decide to keep it with the new owners. In fact you would probably be able to negotiate with the new buyers, and up it to 2%. They would do it for exactly the same reason that the first ones did it. Keep key players on board. There are, however lots of nuances around the negotiations. They won't give you squat if they don;t care if you leave. They won't buy it if you are generating 50% of the profits, its too big a key man risk.

You would match private equity returns, which can be huge 3-400% over 7-9 years in some scenarios. The downside risk is that the company goes under and your share become worthless.

Also, the returns from the sale would be taxed at 20% (capital gains tax, not income tax). It is possible it would fall into the entrepreneurs allowance and only be taxed at 10%, but I am not sure of the definitions in that. If I had a genuine chance of owning a part of an SME, particularly one that would grow and even better grow off the back of my hard work I would grab it and not think twice.

The scenario above is one of the less aggressive types of PE purchase. I personally would be looking to have the share or the option as part of my incentive as a key employee. It is even better if it can be given to you before any purchase would happen. The profit sharing is the first step towards being able to ask for this, but only you can know if it is a long term possibility.

ClunkintheUK

12-11-13, 02:24 PM

Sorry its a long reply, but its the only interesting thing I have done as part of making my living for the last 6 years.

missyburd

16-01-14, 09:52 AM