How can I structure my investment to increase my decision making ability in a company?
I want to acquire a 45% equity stake in a company. What is the best way to structure the deal so that I have a significant say in the company, both on the board and in critical decisions. Would it be better to structure 25% in preferred shares with a large stake on the asset and dividend, and the remaining 20% in common stock?
Share classes are different from company to company and can be customized as much as you and the other owners desire. For example, Facebook is currently creating new share classes so that Mark Zuckerberg can sell 99% of his stake in the company without relinquishing control.
In other words, even if you purchased 51% of the company, you may not have any of the desired control if the share classes (preferred or common) don’t contain the proper provisions.
You should sit down with an attorney to make sure your shares contain the voting rights you desire and a seat on the board.