Controlling Interest

You and two friends buy a pizza for $16. There are eight slices. You, being a responsible human being, only want two slices, so you put in $4. Your other friend paid $2 for one slice.

But your friend John, who lives alone and has beer cans laying around, paid $10. He has five slices, or five-eighths of the pizza. If that pizza were a company, and the slices were stock, and represented votes over the future of that pizza, he would have what is known as a controlling interest. However, he only has five slices of pizza...and a bit of a problem with self-control.

A controlling interest is the majority ownership of a company. When you have a controlling interest, you have enough voting rights to steer the direction of the company in your favor. It means you have legal control of the firm, and you can bend the will of the other shareholders, should you wish. It guarantees you the opportunity to feast on the biggest share of dividends, retained earnings, shares should they split, and even cash if the company is sold.

It also provides you enough control to install a board of directors that is favorable to your interests, and most likely gives you the opportunity to assume the role of Chairman of the Board.

That’s way better than just eating a pizza with two dudes.