Valuation of shares of companies with a dual class structure

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By Gilbert E. Matthews, CFA, Sutter Securities, Inc. (San Francisco, Calif., USA)

What’s happening:

  • An number of companies in U.S. markets are choosing to set up dual class structures and to issue low-vote shares when they go public
  • This protects the control shareholders, usually the founders
  • The companies have dual class equity structures in which the owners of high-vote shares retain voting control
  • 15% of U.S. IPOs in 2015 had dual class structures, up from 12% in 2014 and just 1% in 2005.

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