A corporate investor is an incorporated business that chooses to invest in another company. In some cases, the underlying purpose for the investment goes beyond simply acquiring an interest in the company and moves on to actually taking control of the business. This means that a corporate investor may be perceived as friendly and welcome by the business owners, or as a raider who is out to take over the business by any legal means possible.
In many instances, a corporate investor is simply looking for a means of generating additional revenue using cash reserves already on hand. When this is the case, the investor will purchase available shares of a business that shows promise of increasing its business volume and experiencing some type of appreciation in the value of its stocks. With this type of investment strategy, the corporate investor has no interest in assuming control of the company; instead the focus is on earning a steady return on the investment thanks to the responsible management of the owners and leaders of the company in which the investment is made.
At other times, the goal of the corporate investor is to incrementally gain control of a business by purchasing shares of stock when and as they become available. This approach may be employed for a number of different reasons. The idea may be to acquire a company that produces goods and services needed by the investor to further its own production of goods and services, and possibly obtain those necessary materials at lower prices. An investing strategy of this type may also have the goal of acquiring a competitor as a means of increasing market share and eliminating competition on the marketplace. There is even the possibility that the investor simply wants to acquire the company then dismantle it, selling off its assets as a means of turning a profit.
The reasons for the investment will often dictate the criteria used to target companies as investment opportunities. For example, if the goal of the corporate investor is to acquire shares of stock and generate returns from those holdings over the long term, the investor will likely focus on businesses that are highly likely of remaining industry leaders for many years. Should the goal involve eventual control, the investor will often target companies that need an influx of cash and have investors who are willing to sell their shares at a decent rate. While there is always some risk involved with any type of investment activity, careful planning in advance will help to minimize the risk and increase the chances of the corporate investor eventually obtaining the desired result.
