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Old 11-11-13, 09:24 PM   #41
Dave20046
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Default Re: Engineering career/general life advice...

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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.
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Old 11-11-13, 11:01 PM   #42
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Default Re: Engineering career/general life advice...

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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.
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Old 12-11-13, 12:20 AM   #43
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Default Re: Engineering career/general life advice...

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.
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Old 12-11-13, 08:36 AM   #44
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Default Re: Engineering career/general life advice...

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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.
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Old 12-11-13, 01:32 PM   #45
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Default Re: Engineering career/general life advice...

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?
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Old 12-11-13, 02:23 PM   #46
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Default Re: Engineering career/general life advice...

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.
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Old 12-11-13, 02:24 PM   #47
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Default Re: Engineering career/general life advice...

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.
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Old 16-01-14, 09:52 AM   #48
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Default Re: Engineering career/general life advice...

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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.
We are of the unfortunate generation who graduated just as a recession hit, doomed from the start

Just thought I'd thank ye all for your very informative advice, I've only just stumbled upon this thread.

Oh and apparently I'm awesome, who knew!
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