A corporate investor is an incorporated company that chooses to invest in another company.
A corporate investor is an incorporated company that chooses to invest in another company. In some cases, the underlying objective of the investment goes beyond simply acquiring a stake in the company to take control of the business. This means that a corporate investor may be seen as friendly and welcome by business owners, or as an outsider trying to take control of the business by whatever legal means possible.
In many cases, a corporate investor is simply looking for a way to generate additional income using already available cash reserves. When that is the case, the investor will buy available shares of a company that shows promise in order to increase their turnover and experience some kind of appreciation of their shares. With this type of investment strategy, the corporate investor has no interest in taking control of the company; instead, the focus is on achieving a consistent return on investment, thanks to responsible management by the owners and leaders of the company in which the investment is made.
At other times, the corporate investor’s goal is to gradually gain control of a business, buying shares when they become available. This approach can be used for several different reasons. The idea may be to acquire a company that produces the goods and services that the investor needs to promote his own production of goods and services, and possibly obtain these necessary materials at lower prices. Such an investment strategy may also have the objective of acquiring a competitor as a means of increasing market share and eliminating competition in the market. There is even the possibility that the investor simply wants to acquire the company and then dismantle it, selling his assets as a way of making a profit.
The reasons for the investment will often dictate the criteria used to select companies as investment opportunities. For example, if the corporate investor’s goal is to own stocks and generate long-term returns on those holdings, the investor is likely to focus on businesses that are likely to remain industry leaders for many years to come. If the goal involves eventual control, the investor will generally target companies that need an inflow of cash and have investors willing to sell their shares at a decent rate. While there is always some risk involved in any type of investment activity, careful planning will help minimize risk and increase the chances that the corporate investor will achieve the desired result.