I’m on a kick of watching business investment shows. The investors ask for certain percentages of the business, but what does that actually get them? What’s the difference between a 5% stake and a 25% stake? Do they take a profit share, do they also take on a percentage of the businesses debts? What is equity in layman’s terms?
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It’s simply ownership of the business as others have explained.
The equity owners normally are not responsible for the debts of the company. The debt gets paid back before the equity, so equity holders may lose their investment, but normally they aren’t responsible for anything beyond that.
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