minority-interest-investment

Vocabulary Word

Definition

A minority interest investment happens when a company invests in another company but doesn't get enough shares to control it. It means the investor has some influence but not total control over the invested business.

Examples in Different Contexts

In venture capital, 'minority interest investment' is common, as investors provide capital in exchange for a small equity stake without seeking control of the startup. A venture capitalist might say, 'We focus on minority interest investments in high-growth startups, offering capital and strategic advice without taking over their management.'

Practice Scenarios

Business

Scenario:

If we acquire a majority stake in the startup, it will likely affect our balance sheets significantly. We may need to devise a conservative investment strategy.

Response:

I agree. With the uncertainty in the market, a minority interest investment in the startup could be the best route for us.

Academics

Scenario:

Our next research could explore how investment decisions influence new companies. Could we examine the control dynamics of minority and majority shareholding?

Response:

Absolutely, examining how majority and minority interest investments influence decision-making in startups could be fascinating. It's an under-explored area.