A company's change of control often occurs due to the selling of its shares, either in the open market or through a private transaction at an agreed price. This can also occur through a primary market route when additional shares or rights shares are allotted to, and paid for by, existing shareholders or outsider applicants.
IPO Valuation Model
This can also occur due to the conversion of a convertible portion of debentures or bonds, or any planned arrangement provided in an agreement for future transfer of shares.
A change of control may imply the sale or acquisition of the whole, or a substantially complete part, of all the assets of an entity due to a complete merger, demerger, restructuring, acquisitions transacted between any individuals and/or corporate entities, or any change in the ownership of more than 50 percent of the voting shares of the entity (in one or a series of related transactions).
The acquisition of a controlling stake in a listed company is subject to various regulations of companies and listing agreements, disclosure requirements and rules of boards of security exchanges.
In some countries, senior executive employment contracts contain a change in control provision, which provides enhanced protection against arbitrary termination when a different owner takes over the management control of a company.