4 ms·

If you purchase all of a company's stock, assuming that confers you 100% of voting rights, then you do "own" the company by most definitions, and certainly by t

If you purchase all of a company's stock, assuming that confers you 100% of voting rights, then you do "own" the company by most definitions, and certainly by the definitions that creditors would use when they demand their money back from your liabilities. In practice, once you own all those shares, you control the board of directors and can vote on how to handle liabilities, for example by using mechanisms like leveraged buyouts to (legally) shift liabilities to a new entity. The trouble is that to purchase 100% of shares of a company, someone has to sell those shares to you. Just because the stock tanks to $0.01 doesn't mean the board members will sell you all of their shares and voting rights. They don't have to accept your offer.

tener 4y ago
For the public company: you pretty much can just buy it, barring stuff such as poison pills or regulatory approvals.
- KeplerBoy 4y ago
  Doesn't seem to be true. Surely the stocks are held by all kinds of people and institutions and only a very small fraction of the shares are up for sale at any given time. Am i missing something? Also the stockprice listed is the price of the cheapest share currently offered, isn't it?
  - loeg 4y ago
    > Surely the stocks are held by all kinds of people and institutions and only a very small fraction of the shares are up for sale at any given time. Am i missing something? Well, when the price goes up from your buying, more of those shares become available. > Also the stockprice listed is the price of the cheapest share currently offered, isn't it? Well, probably last successful transaction, but these are more or less the same number. What you're getting at is that buying the stock piecemeal will drive up the price, which is true. Usually when you want to buy the entire company, you don't buy it piecemeal on the open market. You offer a premium to the market price to the board and the board decides whether or not to propose the deal to shareholders for approval (tender offer). Or you could do a hostile bid which is where you go directly to shareholders.
user3939382 4y ago
Shifting liabilities to a new entity — some company tried that recently and the courts struck it down.
- TechBro8615 4y ago
  I thought this was a fairly standard practice as part of leveraged buyouts? I'm no private equity investor though so no idea.
  - user3939382 4y ago
    This was it: Johnson & Johnson https://www.reuters.com/legal/jjs-ltl-units-bankruptcy-dismissed-by-us-appeals-court-filing-2023-01-30/ https://www.reuters.com/legal/jjs-ltl-units-bankruptcy-dismi... This case is specifically about this strategy in bankruptcy but I wouldn't be surprised to see this decision propagate more broadly. > J&J is among four major companies that have filed so-called Texas two-step bankruptcies to avoid potentially massive lawsuit exposure. The tactic involves creating a subsidiary to absorb the liabilities and to immediately file for Chapter 11.

tener 4y ago

For the public company: you pretty much can just buy it, barring stuff such as poison pills or regulatory approvals.

KeplerBoy 4y ago
Doesn't seem to be true. Surely the stocks are held by all kinds of people and institutions and only a very small fraction of the shares are up for sale at any given time. Am i missing something? Also the stockprice listed is the price of the cheapest share currently offered, isn't it?
- loeg 4y ago
  > Surely the stocks are held by all kinds of people and institutions and only a very small fraction of the shares are up for sale at any given time. Am i missing something? Well, when the price goes up from your buying, more of those shares become available. > Also the stockprice listed is the price of the cheapest share currently offered, isn't it? Well, probably last successful transaction, but these are more or less the same number. What you're getting at is that buying the stock piecemeal will drive up the price, which is true. Usually when you want to buy the entire company, you don't buy it piecemeal on the open market. You offer a premium to the market price to the board and the board decides whether or not to propose the deal to shareholders for approval (tender offer). Or you could do a hostile bid which is where you go directly to shareholders.

user3939382 4y ago

Shifting liabilities to a new entity — some company tried that recently and the courts struck it down.

TechBro8615 4y ago
I thought this was a fairly standard practice as part of leveraged buyouts? I'm no private equity investor though so no idea.
- user3939382 4y ago
  This was it: Johnson & Johnson https://www.reuters.com/legal/jjs-ltl-units-bankruptcy-dismissed-by-us-appeals-court-filing-2023-01-30/ https://www.reuters.com/legal/jjs-ltl-units-bankruptcy-dismi... This case is specifically about this strategy in bankruptcy but I wouldn't be surprised to see this decision propagate more broadly. > J&J is among four major companies that have filed so-called Texas two-step bankruptcies to avoid potentially massive lawsuit exposure. The tactic involves creating a subsidiary to absorb the liabilities and to immediately file for Chapter 11.