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Minority Interest

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See attached file for history of acquisition.

What would be the advantage of purchasing a minority interest in Shang Wa compared with purchasing a controlling interest?

Would purchasing a minority interest protect LEI from a third party coming in and acquiring a controlling interest in Shang Wa?

What are the most important metrics to use when evaluating the results of an acquisition?

How long after completing the acquisition should the acquiring company wait before completing its evaluation of the deal?

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Solution Summary

The solution discusses the factors involved in a controlling interest and purchasing a minority interest for Shang-wa

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The following guide will assist with your studies and further your knowledge on the subject of minority interest.

What would be the advantage of purchasing a minority interest in Shang Wa compared with purchasing a controlling interest?

A minority interest comes with rights. The rights associated with a minority interest are the "board seat." When a board seat comes with a minority interest, advantages come along with it as benefiting from the acquisition. Earnings can be significant as this strategic investment can provide vast economic returns.

With a minority interest, the investor knows of decisions made but in general cannot influence the sale of underlying assets the company has. Many economic outcomes are associated with the interest as the more the company is sold for the higher the profit. The right also possesses a role in governance.

The controlling interest is just that, controlling. The controlling interest is the decision maker, as the controlling interest investor has the majority of board ...

Solution provided by:
Jo Ann Prevetti, MBA, PhD (IP)
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  • Bachelor of Science in Paralegal Studies, Kaplan College
  • Business Diploma, Katharine Gibbs Business College for Women
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