CompanyGraph
Records the outside shareholders' claim on subsidiary equity, exposing how much of the consolidated balance sheet belongs to owners the parent company does not control.
Minority interest in equity represents the portion of subsidiaries that is owned by outside shareholders. It shows how much of the group's net assets do not belong to the parent company's shareholders.
Minority interest in equity represents the portion of subsidiaries that is owned by outside shareholders. It shows how much of the group's net assets do not belong to the parent company's shareholders.
How minority interest arises:
- Partial acquisitions: Parent acquires more than 50% but less than 100% of a subsidiary
- IPO of subsidiary: Parent sells minority stake in a subsidiary
- Joint ventures: Consolidated entities with outside owners
Balance sheet treatment:
- Consolidation: Parent includes 100% of subsidiary assets and liabilities
- Equity allocation: Minority interest shows the portion belonging to outside owners
- Separate line item: Reported within equity but distinct from parent shareholders' equity
Why it matters:
- True ownership: Shows equity actually belonging to parent company shareholders
- Complex structures: Significant minority interests indicate subsidiaries with outside owners
- Future considerations: Parent may buy out minorities or sell down stakes
- Valuation impact: Minority interests must be considered in enterprise value calculations
Analysis approach:
- Track changes: Growing minority interest may indicate partial sales or subsidiary growth
- Profitability: Compare minority interest growth to subsidiary profit allocation
- Enterprise value: Add minority interest to market cap when calculating EV