Investment BankingIntermediate

Control Premium

The extra amount a buyer pays above the market price to gain control of a company.

Detailed explanation

Control lets the buyer set strategy, appoint management and capture synergies, so it commands a premium over minority share prices.

Formula

Premium = (Offer price − Undisturbed share price) ÷ Undisturbed price × 100

Example

Offer ₹130, pre-announcement price ₹100 → 30% premium.

Why it matters

Explains why target shares jump on takeover news.

Key points

  • Measured against undisturbed price.
  • Reflected in precedent transactions.
  • In India, open offers follow SEBI takeover rules.

Related terms

Precedent Transaction AnalysisMergers & Acquisitions

More in Investment Banking

Investment BankingMergers & AcquisitionsEquity Capital MarketsDebt Capital MarketsPitch BookDiscounted Cash Flow

Educational content only. Definitions and examples are illustrative and are not investment, tax or legal advice.