Intercorporate Investment

We’re always on the lookout for good investment opportunities, so when our eye is caught by C-It 4U, Inc., a small fortune-telling business in Atlantic City, we convince the board of directors at our own firm (Destiny Calls, LLC) that we need to invest in that little company ASAP. They’re going places, and we want to cash in on their success.

When one organization invests in another like this, it’s called, not surprisingly, “intercorporate investment.”

The C-It 4U-Destiny Calls scenario is referred to as a minority investment—we’re not buying all that many shares—but there are other ways intercorporate investment can happen. We could take over a company’s debts in return for future financial returns, or we could buy so much of their stock that our organization becomes a major stakeholder and/or has a controlling interest. We could even negotiate a private deal with C-It 4U, where we purchase maybe just a little slice of the corporation. Whatever form it takes, these are all versions of intercorporate investment.