How to buy a company with out all the money. #hostiletakeover #bernardarnault #finance #lvmh #tiktokfinance #money

How do you buy a company without actually having all the money to be able to buy it? This concept was actually mastered by Bernard Arnault from LVMH. He was able to buy with very little money a mid-sized company and then got that mid-sized company to buy an even bigger company. That is called a Russian doll corporate structure where the big shell is controlled by a smaller shell and that smaller shell is controlled by an even smaller shell. So the way that it works is actually super simple. You set up an investment company. You sell almost half of the shares of that investment company but not quite, 49%. So you get funds from investors for that. You take the funds from your investors plus your funds and you buy a controlling stake in a mid-sized company. But once again you don't call go for the whole thing. You just buy 51% of that mid-sized company and then you get that mid-sized company to buy shares in an even bigger company. You don't need to buy 51%. You just need to buy enough to be able to control the board of directors of that bigger company. Suddenly you have an investment firm that controls a mid-sized firm and that mid-sized firm controls a bigger company with the board of directors. And that's a way that you begin to see more and more companies going out and doing private equity deals, leveraged buyout deals to have controlling stakes in bigger companies.