MHB Calculating Equity in Company A: 1.2% for $600,000.00

[Confused00901]

Company A’s value is stated at $50,000,000.00 the company is set up into 2 separate entities Company B with 40% equity and Company C with 60% equity. If a customer wants to own 1.2% of Company A, but only wants to hold part of Company C at 60%, how much would the customer have to spend to buy 1.2% of Company A?

 

[skeeter]

1.2% of Company A’s value of 50 million is 600,000

not clear what Company C’s equity of 30 million has to do with that 1.2%

 

[Confused00901]

They only want to buy into Company C, and not Company B. So what amount do they have to pay to invest in C since that company holds 60%?

 

[skeeter]

They only want to buy into Company C, and not Company B. So what amount do they have to pay to invest in C since that company holds 60%?

Purchasing 600,000 of equity from company C is still 1.2% of company A since C is contained within A.
Still not seeing how the equity shares of A held by B and C make any difference.

 

[WillowKuth]

I'll ask the accountant that question. Even though I own a business, I've never been involved in the money side of the business. This may have caused me to go bankrupt last year. I can't 100% blame the person who did all the accounting, but he should have warned me about possible financial difficulties. I had to consult with antonybatty.com for a month to restart the business successfully. Now I also work in the accounting industry, but it has become more difficult with the start of inflation worldwide.

 

[HallsofIvy]

I am interpreting he "only wants to hold part of Company C at 60%" to mean that he wants to buy only a share of company C, none of company B.

Company A is worth \$50,000,000. Company C is worth 60% of that, \$30,000,000. 1.2% of \$50,000,000 is \$600,000. He must buy $\frac{600000}{30000000}= 0.02$ or 2% of company C.