How can you have a 'majority stake' in a company when only 20% of equity is publicly traded?
Usually ~20% of a company's equity is sold in an IPO. If an investor decides to purchase a "majority stake" of that stock, lets say 51% of the publicly traded stock, they really only own ~10% of that company's total equity so how can they even be considered a majority owner? im v confused pls help
In reality, shareholders exercise their power through voting. So it depends on the voting rights of shares. Typically the management team/C-suite will own shares that have disproportionately high voting power. Then they’ll issue Class B shares in connection with the IPO, and these shares will have less voting power. Where are you getting this idea that a 10% owner could be considered a majority owner?
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