4 ms·
How does that work? In this case wouldn't the individual with > 50% shares need to be diluted to < 50% for another party to acquire > 50% stake? And surely at
by kypro 3y ago
How does that work?
In this case wouldn't the individual with > 50% shares need to be diluted to < 50% for another party to acquire > 50% stake?
And surely at the point of dilution the individual would realise they have < 50% shares and this was a risk?
I guess what I'm confuse at is if you own 51% of the shares, unless you sell some of that or dilute your holding there will only ever be 49% stake that can be purchased by another party.
Am I missing something?
- dspillett 3y ago> if you own 51% of the shares Your understanding is correct there. > Am I missing something? I think you are missing that there may be one or more third parties who also own a stake. A quick example (figures plucked from the air, not a real world case) might make it clear: Starting point: Founder 75%, Other(s) 25% -- New investor buys 49% from founder: Founder 26%, Other(s) 25%, New Investor 49% Founder no longer has overall control, but nor does the new investor Founder+Others can block the new investor if they all agree -- New investor buys 2% from elsewhere: Founder 26%, Other(s) 23%, New Investor 51% New investor now has overall control and can do pretty much what they like It should be obvious that this is a risk, so my sympathy is low. If the new investor promised that sort of thing wouldn't happen then it is a crappy thing to do, but the founder should know that in business very little which isn't written & signed is worth as much as the paper it isn't written on. This sort of thing happens all the time.