# IT:BD:Finance/Value Of Company #



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## Process ##

Consider the following scenario:

* Two partners:
    * PartnerA puts in a year of work, afterhours, at 4 hours a day, at going rate of 80K/annum. As it's half a day, the value of the work is 40K. 
        * Maybe it's worth more: [http://www.entrepreneur.com/article/182440](http://www.entrepreneur.com/article/182440)
    * PartnerB puts in 9K of cash equity.
    * The notional value of the company is therefore 49K.
* The company is formed with 1200 shares.
    * The Notional [Ref](http://en.wikipedia.org/wiki/Notional_amount) value of the company is therefore 49K/1200 := $40.83
    * It's notional as its face value, without intent to be sold/tested.
    * At the end of this period of time, the company has 
        * additional assets in the form of computers, worth 5K.
        * created IP that 
            * if sold incomplete on the open market, would be worth 5K
            * if completed, could be worth 2,000,0000.
    * The Total value is either: 
        * 49K + 5K + 5K (ie, 59), and to attract an additional 200k of investment, would mean that the additional shares would be worth 200/259 of the company.
    * To attract an additional 200K, would be worth 200,000/2,000,059 of the company. 

In addition, the sweat van be valued as shares, or a loan, that is either secured, or unsecured.

* Constitution (Rules)
    * Lodged with Company's Office
* HouseKeeping
    * Accountant
* Shares can be allocated by:
    * Share Holders Agreement (less formal, but signed).