Going Private
Categories: IPO, Entrepreneur, Company Management
Very different than going in private. Make sure you slide over the little "Occupied" latch before dropping trou.
Ok, so...what is "going private"? Well, hold a mirror up to "IPO." Yep, initial public offering. You’ll see it…in reverse.
That’s kinda what going private is. The IPO took your company public. Investors bought and sold the stock. They were in love with it. And then...they weren’t.
You are sick and tired of dealing with public investors’ moodiness, and you just want your old company back. So the process of going private usually involves management. The people who run the company (or new management) brought in for this purpose, who have taken on large amounts of debt, and have offered some premium price above where the stock is trading to then…own it and delist it off the exchanges its trading on.
Like...the Leany Potty. A great new product for people who don’t like to…squat. It’s trading at $15 a share after coming public at $12, and at one point kissing $100 a share. The founder, Lionel Leany, wants to take it private and will offer $18 a share for the privilege.
If investors tender their shares (or sell them back to the company or buyer buying them), then the company no longer has a ticker symbol, stock options, the prestige…all of which are the fruits of being public. It’s just owned by whoever bought it. And they can do more or less whatever they want with it at this point.
They don't have to file public quarterly reports. They don’t have to conform to federal disclosure laws for public shareholders. They can pretty much ignore the myriad costs of being public, and just run the business to grow and produce cash for shareholders.
Yeah, ahh…the benefits of going in...er…being private.
Related or Semi-related Video
Finance: What is Going Private?4 Views
Finance a la shmoop what is going private?
oh wait that's going in private - never mind okay so what is going private well [Girl slams door]
hold a mirror up to IPO yep initial public offering and you'll see it in
reverse well that's kind of what going private is the IPO took your company
public investors public ones bought and sold the stock they were in love with it
and then they weren't you're sick and tired of dealing with public investors [Company IPO graph appears]
moodiness and you just want your old company back so the process of going
private usually involves management ie the people who run the company or new
management brought in for this purpose taking on large amounts of debt LBO'ing
leverage buying out the company, or MBO'ing management buying out the company
and they offer some premium price above where the stock has been trading to then
own it and delist it off of the exchanges it's trading on like the
Leany Potty; a great new product for people who don't like to squat yeah it's
trading at 15 bucks a share after coming public at 12 and at one point kissing a [Leanny Potty share prices appear]
hundred bucks a share the founder Lionel Leany wants to take it private and will
offer $18 share for that privilege if investors tender their shares or sell
them back to the company or buyer buying them well then the company no longer has [Person carrying basket of groceries]
a ticker symbol stock options the prestige all of which are the fruits of
being public it's just owned by whoever bought it and they can do more or less
whatever they want with it at this point they don't have to file public quarterly
reports they don't have to conform to federal disclosure laws for public
shareholders they can pretty much ignore the myriad costs of being public and
just run the business to grow and produce cash for shareholders yeah [People counting cash]
the benefits of going or being private