Going Private

Going-private transactions are often carried out by private equity firms, sometimes together with the company's management, or by a controlling shareholder buying out the remaining public shareholders. They are frequently financed with significant debt, as leveraged buyouts.

Companies or their owners may choose to go private to escape the pressure of quarterly results, reduce the costs and disclosure requirements of being listed, make major changes away from public scrutiny, or because the buyer believes the market undervalues the company.

For example, a private equity firm might offer public shareholders a premium of 30% above the share price, buy all the shares and delist the company, aiming to improve it and sell it a few years later.

Going-private transactions raise concerns about fairness, especially when management or a controlling shareholder is involved, since they may know more about the company's value. Rules often require independent committees of directors, fairness opinions and shareholder approval to protect minority shareholders.