What is a squeeze-out?
A squeeze-out is an action undertaken by a company’s majority shareholders to force minority shareholders to sell their stakes in the company in order to gain complete control of the firm.
Key takeaways
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A squeeze-out allows majority shareholders to force minority shareholders to sell their stakes to gain complete control of a company.
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Squeeze-out thresholds vary by country, requiring 90% shareholder ownership in the UK and 95% in Germany to force sales.
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Legislation now requires minority shareholder compensation and prohibits tactics like terminating employees or refusing to declare dividends during squeeze-outs.
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The practice is commonly associated with takeover bids, exemplified by the Glazer family's 2005 Manchester United takeover and squeeze-out.
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The objective enables majority investors to make company decisions independently without relying on approval from minority shareholders.
Where have you heard about squeeze-outs?
The term is often associated with takeover bids. When the Glazer family took over Manchester United in 2005, they forced a squeeze-out of the remaining shareholders.
What you need to know about squeeze-outs.
The percentage of shareholders needed for a squeeze-out varies from country to country. The UK requires shareholders owning 90% of the company to consent to squeeze out the other shareholders, while in Germany 95% is required.
Legislation has been tightened regarding squeeze-out tactics, which in the past have included the termination of minority shareholder employees or the refusal to declare dividends. Minority shareholders have to be compensated for surrendering their shares.
The objective of this right to a forced sale is that the majority investor can take decisions without having to rely on others.
Find out more about squeeze-outs.
Read our definition of minority shareholder to discover more.