Control premium
Principles of Finance glossary · Valuation of Bonds & Stocks
Definition
The additional price paid to acquire a controlling interest in a firm.
Control premium in plain English
When you own more than half of a company's shares, you don't just own a slice — you get to call the shots: pick the managers, set the strategy, decide on selling the whole thing. A control premium is the extra amount a buyer happily pays per share to cross that line and get command, above what the same shares would fetch as a tiny passive stake. It's like paying more for the one apartment in a building that also comes with the keys to run the whole building — the power to steer is worth real money, so buyers pay up for it.
Learn these first
Related Principles of Finance terms
Principles of Finance practice questions · Principles of Finance flashcards · Principles of Finance study guide