Person A owns 51% of the shares of a company. Person B owns 49% and is willing to pay literally any amount of money to buy enough stock to become the majority shareholder. Person A is not willing to sell no matter what. How is the price of the stock determined?

Question

Person A owns 51% of the shares of a company. Person B owns 49% and is willing to pay literally any amount of money to buy enough stock to become the majority shareholder. Person A is not willing to sell no matter what. How is the price of the stock determined?

In: 20

Answer 1

Fwiw, there are other ways to value a company. Market cap is just 1 of them.

You can do a technical analysis of its Financials and compare it to other similar companies.

Or you can do a discounted cash flow valuation based an expected future performance.

In an efficient market all 3 things should be similar, varying only by the assumptions you must make in each. In reality… to actually lay out the assumptions to support their market cap can be a sobering realization.