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 mergers and acquisitions, acquiring a 'minority interest investment' in a company can be a strategic move to diversify investments or enter new markets without full merger or acquisition. An M&A consultant might note, 'Pursuing a minority interest investment can be a lower-risk way to explore synergies with another company.'

Practice Scenarios

Tech

Scenario:

Rapid tech developments mean we need to keep pace without spreading ourselves thin. Obtaining a share in tech startups offers one solution.

Response:

Making a minority interest investment in promising tech startups seems like a viable plan. It would let us access innovative tech without the stress of managing another business.

Startup

Scenario:

Multiple investors have expressed interest, and we need to maintain control over our operational independence. We should be clear about the terms of investments we accept.

Response:

Correct; maintaining control is crucial. So, we should prefer minority interest investments to ensure our operational freedom.