Incorporating, issuing stock and evaluating it
No.  Mark-to-market valuation relies on using a competitive market of public traders to determine the share price --- from free-market trading among independent traders who are not also insiders.   Any professional valuation would see through the promotional nature of the share offer. It is pretty obvious that the purchaser of a share could not turn around and sell their share for $10, unless the 'free hosting' that is worth most of the $10 follows it... and that's more of hybrid of stock and bond than pure stock.  It is also pretty obvious that selling a few shares for $10 does not mean one could sell 10,000,000 shares for $10, because of the well known decreasing marginal value effect from economics. While this question seems hypothetical, as a practical matter offering to sell share of unregistered securities in a startup for $10 to the general public,  is likely to run afoul of state or federal securities laws -- irregardless of the honesty of the business or any included promotional offers.   See http://www.sec.gov/info/smallbus/qasbsec.htm for more information about the SEC regulations for raising capital for small businesses.
"Thanks for your question Dai. The circumstances under which these buyouts can occur is based on the US takeover code and related legislation, as well as the laws of the state in which the company is incorporated. It's not actually the case that a company such as Dell needs to entice or force every shareholder to sell. What is salient is the conditions under which the bidder can acquire a controlling interest in the target company and effect a merger. This usually involves acquiring at least a majority of the outstanding shares. Methods of Acquisition The quickest way for a company to be acquired is the ""One Step"" method. In this case, the bidder simply calls for a shareholder vote. If the shareholders approve the terms of the offer, the deal can go forward (excepting any legal or other impediments to the deal). In the ""Two-Step"" method, which is the case with Dell, the bidder issues a ""tender offer"" which you mentioned, where the current shareholders can agree to sell their shares to the bidder, usually at a premium. If the bidder secures the acceptance of 90% of the shares, they can immediately go forward with what is called a ""short form"" merger, and can effect the merger without ever calling for a shareholder meeting or vote. Any stockholders that hold out and do not want to sell are ""squeezed out"" once the merger has been effected, but retain the right to redeem their outstanding shares at the valuation of the tender offer. In the case you mentioned, if shareholders controlling 25% of the shares (not necessarily 25% of the shareholders) were to oppose the tender offer, there would be serveral alternatives. If the bidder did not have at least 51% of the shares secured, they would likely either increase the valuation of the tender offer, or choose to abandon the takeover. If the bidder had 51% or more of the shares secured, but not 90%, they could issue a proxy statement, call for a shareholder meeting and a vote to effect the merger. Or, they could increase the tender offer in order to try to secure 90% of the shares in order to effect the short form merger. If the bidder is able to secure even 51% of the shares, either through the proxy or by way of a controlling interest along with a consortium of other shareholders, they are able to effect the merger and squeeze out the remaining shareholders at the price of the tender offer (majority rules!). Some states' laws specify additional circumstances under which the bidder can force the current shareholders to exchange their shares for cash or converted shares, but not Delaware, where Dell is incorporate. There are also several special cases. With a ""top-up"" provision, if the company's board/management is in favor of the merger, they can simply issue more and more shares until the bidder has acquired 90% of the total outstanding shares needed for the ""short form"" merger. Top-up provisions are very common in cases of a tender offer. If the board/management opposes the merger, this is considered a ""hostile"" takover, and they can effect ""poison pill"" measures which have the opposite effect of a ""top-up"" and dilute the bidders percent of outstanding shares. However, if the bidder can secure 51% of the shares, they can simply vote to replace the current board, who can then replace the current management, such that the new board and management will put into place whatever provisions are amenable to the bidder. In the case of a short form merger or a vote to effect a merger, the shareholders who do not wish to sell have the right to sell at the tender price, or they can oppose the deal on legal grounds by arguing that the valuation of the tender offer is materially unfair. However, there are very few cases which I'm aware of where this type of challenge has been successful. However, they do not have the power to stop the merger, which has been agreed to by the majority of the shareholders. This is similar to how when the president is elected, the minority voters can't stop the new president from being inaugurated, or how you can be affected if you own a condo and the condo owners' association votes to change the rules in a way you don't like. Tough luck for you if you don't like it! If you want more detail, I'd recommend checking out a web guide from 2011 here as well as related articles from the Harvard Law blog here. I hope that helps!" "&gt; However, the reality is that we the minute we are born we benefit from living in a civilized society with services and infrastructure that was created by those who have paid taxes in the past.  I didn't ask for those services or that infrastructure. When I go to vote (especially on referendums) I vote no for things like increased sales taxes for better roads and the like  &gt; Your example is faulty because it assumes you receive no benefit from the taxes that the government demands of you.  Ok, does that make it moral if I come to your house with a gun and handcuffs, if I use the $100 I take from you and spend $5 of it on a sandwich that you eat?  I'm not saying that things the government does aren't things that people need. Obviously people need to save for retirement and will need access to health care (SS/Medicare/Medicaid).  However,  a lot of these ""issues"" weren't really issues when they were implemented. They were also implemented in a very immoral manner.  Regardless of that, our argument is who can do what better.  &gt; but that is what our elected leaders currently find of value.  That means absolutely nothing to me, and it should mean absolutely nothing to you.  Democracy is mob rule. Republic is near mob rule. In capitalism, my choice of product or service doesn't impede yours. I can choose Crest toothpaste and you can still get Colgate. I also have no ability to force you to buy Crest, at least no moral ability that is.  However, choices in a Democracy/Republic are. Not only when I vote for candidate A, and you vote for candidate B, are our choices mutually exclusive, they are literally saying I think you should be forced to live under their rule/my beliefs. Which is immoral. To force  someone to do anything is immoral, the only exception is if they put force upon you (self defense)  &gt; I am not sure where that number is coming from. I know at one point JEIDDO by itself spent over $1T in R&amp;D on the IED problem.  I said in the 2017 request, meaning 1 year.  I got that from here: http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2017/FY2017_Budget_Request_Overview_Book.pdf on page 5-1  I will add, that I didn't see previously that it is part of the RDT&amp;E budget which is ""Research, Development, Test, &amp; Evaluation, which is almost $72 billion. That number does eclipse the original $12.5 billion that I quoted. However, in comparison to the private sector, I only named a few companies. The total R&amp;D spend is still going to be bigger in the private sector.  Just because you buddy use to work for people who made and designed drones for DOD/DTRA and now works for Amazon doesn't mean that without the military/DOD we wouldn't be where we are with drones.   &gt; Bernie Sanders  This is just one article that I found rather quickly: https://www.vox.com/2016/3/4/11161616/bernie-sanders-tax-policy-center  A lot of my income comes from trading stocks, a lot of the times I use options (or as he puts it Wall Street Speculation)  The tax that he wants to impose on ""Wall Street Speculation"" was nothing more than fancy double speak for things like stock options/futures.  Options are used by most 401(k) managers, pension planers, etc. Those taxes would have hurt everybody. It would have made the stock market less price efficient and less liquid.  You know who it wouldn't have hurt? The people he intended to stop in the first place, people like George Soros. I believe it was in just 1 day Soros made over $1 billion by shorting the British Pound back in the 90's. I believe he also made a killing shorting if just before Brexit." Both are correct depending on what you are really trying to evaluate. If you only want to understand how that particular investment you were taking money in and out of did by itself than you would ignore the cash.  You might use this if you were thinking of replacing that particular investment with another but keeping the in/out strategy. If you want to understand how the whole investment strategy worked (both the in/out motion and the choice of investment) than you would definitely want to include the cash component as that is necessary for the strategy and would be your final return if you implemented that strategy. As a side note, neither IRR or CAGR are not great ways to judge investment strategies as they have some odd timing issues and they don't take into account risk. If you are talking straight dollars then leasing is always a losing proposition when compared with purchasing. The financial workings of leasing are so confusing that people don’t realize that leasing invariably costs more than an equivalent   loan. And even if they did, the extra cost is difficult to calculate.   Still, many people can’t afford the higher payments of a typical loan,   at least not without putting a substantial amount down. If payments   are an issue, consider buying a lower-cost vehicle or a reliable used   car. http://www.consumerreports.org/cro/2012/12/buying-vs-leasing-basics/index.htm If you are talking about convenience, lifestyle, ability to purchase a car you could not pay for outright, then you will have to evaluate that. Yes but this also goes against the idea that somehow, after injecting more of their money into the firm by exercising their rights, shareholder wealth still remains the same?  So if shareholders also injected cash, how come their total wealth didn't change? First, the stock does represent a share of ownership and if you have a different interpretation I'd like to see proof of that. Secondly, when the IPO or secondary offering happened that put those shares into the market int he first place, the company did receive proceeds from selling those shares. While others may profit afterward, it is worth noting that more than a few companies will have secondary offerings, convertible debt, incentive stock options and restricted stock that may be used down the road that are all dependent upon the current trading share price in terms of how useful these can be used to fund operations, pay executives and so forth. Third, if someone buys up enough shares of the company then they gain control of the company which while you aren't mentioning this case, it is something to note as some individuals buy stock so that they can take over the company which happens. Usually this has more of an overall plan but the idea here is that getting that 50%+1 control of the company's voting shares are an important piece to things here. "An option without the vesting period and the price at which one can exercise the option is of not much value. If vesting is determined by board, then at any given point in time they can change the vesting period to say 3, 5, 10 years any number. The other aspect is at what price you are allowed to exercise the option, ie if the stock is of value 10, you may be given an option to buy this at 10, 20 or 100. This has to be stated upfront for you to know the real value. On listing if the value is say 80, then if you have the option to exercise at 10, or 20 you would make money, else at 100 you loose money and hence choose not to exercise the option. However your having stuck around the company for ""x"" years in anticipation of making money would go waste. Without a vesting period or the price to exercise the option, they are pretty much meaningless and would depend on the goodwill of the founders" I have heard that people say the greater earning means greater   intrinsic value of the company. Then, the stock price is largely based   on the intrinsic value. So increasing intrinsic value due to   increasing earning will lead to increasing stock price. Does this make   sense ? Yes though it may be worth dissecting portions here. As a company generates earnings, it has various choices for what it can do with that money. It can distribute some to shareholders in the form of dividends or re-invest to generate more earnings. What you're discussing in the first part is those earnings that could be used to increase the perceived value of the company. However, there can be more than a few interpretations of how to compute a company's intrinsic value and this is how one can have opinions ranging from companies being overvalued to undervalued overall. Of Mines, Forests, and Impatience would be an article giving examples that make things a bit more complex. Consider how would you evaluate a mine, a forest or a farm where each gives a different structure to the cash flow? This could be useful in running the numbers here.