Affiliate
The process of getting to know someone involves what we're going to call "climbing the ladder of friendship." The two of you get closer over time, eventually going from stranger to acquaintance to buddy to chum to friend to BFF and maybe on to lifelong companion. The same can be said about companies.
Companies can form different kinds of associations. These relationships can range from simple business dealings that make them clients or vendors...to closer ties, such as one firm being a full-fledged subsidiary of another.
One of these degrees of separation is called an "affiliate." Generally, this designation means one company owns part of another company, though they do not hold a majority stake.
In some cases, the two companies might hold minority ownership stakes in each other. Businesses will often try to cement long-standing partnerships by taking small ownership stakes in each other. This practice allows the companies to see each other's financials, and helps ensure a close working relationship.
Also, large companies with key vendor relationships might seek to take small stakes in these vendors. This helps secure supply lines and provides the bigger company more control over its production process.
Related or Semi-related Video
Finance: What is an Affiliated Person or...3 Views
finance a la shmoop - What is an affiliated person or affiliated investor
ah Phil he eight ed.. affiliated meaning with or connected to or legally
conjoined at the hip that's affiliated well why does the concept even matter or
exists in finance land well because too many times in the dark [Ancient ornament appears]
days before the SEC was invented family members seemed to always get spectacular
breaks in knowing just when to buy stock right before the big merger happened
well the SEC took notice and basically declared that affiliated people like
family members or people living under the same roof or connected in various
and sundry other you know close means well all of them would be treated more [The Daily Shmoop newspaper page]
or less as the same person as far as the law was concerned they created this
notion of an affiliate so that Joe Sixpack would have at least as fair a [Joe Sixpack appears]
chance to get positive investment returns at least as close as you know
the the close-knit cousin living in the guest home of the CEO of whatever
dot-com only back then it was just called whatever simply said if you're an
affiliate of an insider ie someone who can't just buy and sell shares of a
given company whenever they want because they have inside knowledge then you the
affiliate are legally treated as if you yourself are the insider that's an [Insider and affiliate side by side]
affiliate so don't let what happen to Phil happen to you [Phil standing behind bars]
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