Minority transaction

A minority transaction involves the acquisition of a non-controlling stake — below 50% of voting rights — in a company, without obtaining management control. Minority investors typically negotiate contractual protections compensating for their lack of legal control: board representation rights, veto rights on material decisions, tag-along rights and pre-emption rights. In valuation, minority interests are priced at a discount to the pro-rata enterprise value, reflecting reduced control and liquidity.

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Example: a private equity fund acquires a 30% stake in a Swiss industrial group for CHF 9.0 million — implying a total enterprise value of CHF 30.0 million (30% × 30.0). The fund negotiates: 1 of 5 board seats, veto rights over transactions above CHF 2.0 million, tag-along on any majority sale and a put option at a floor price of CHF 9.0 million after 3 years. These protections partially compensate for the absence of majority control.

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Hectelion values minority interests with documented control and liquidity discounts, and advises on the contractual protections needed to make minority positions economically viable.