Consider a three-tier pyramid and a single operating company.Assume that 51 percent of the votes confer control at each tier.What is the minimum percentage ownership (approximately) at the highest level in the pyramid that will enable control of the operating company?

Question

Quizplus · Accepted Answer

At the highest level of the pyramid, the owner needs to have at least 51 percent ownership to control the company below. However, since the question asks for the minimum percentage ownership, we need to calculate the ownership required at each tier below. 
To control the next level down, the owner needs 51 percent of the previous level's ownership. Therefore, the minimum percentage ownership at the second level would be:
51% * 51% = 26.01%
And to control the operating company, the owner needs 51 percent of the second level's ownership:
51% * 26.01% = 13.2651%, which we can round up to 14%. 
Therefore, the minimum percentage ownership at the highest level to control the operating company is 14%.

Consider a Three-Tier Pyramid and a Single Operating Company