Finance: What is Going Private?

What is Going Private? Going private is the process of converting a company from a publicly traded company to a private business (shares are no longer eligible for trade). Usually this happens when the company is failing in an attempt to help it bounce back.

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Transcript

00:26

and then they weren't you're sick and tired of dealing with public investors [Company IPO graph appears]

00:30

moodiness and you just want your old company back so the process of going

00:34

private usually involves management ie the people who run the company or new

00:39

management brought in for this purpose taking on large amounts of debt LBO'ing

00:43

leverage buying out the company, or MBO'ing management buying out the company

00:47

and they offer some premium price above where the stock has been trading to then

00:51

own it and delist it off of the exchanges it's trading on like the

00:56

Leany Potty; a great new product for people who don't like to squat yeah it's

01:01

trading at 15 bucks a share after coming public at 12 and at one point kissing a [Leanny Potty share prices appear]

01:06

hundred bucks a share the founder Lionel Leany wants to take it private and will

01:11

offer $18 share for that privilege if investors tender their shares or sell

01:16

them back to the company or buyer buying them well then the company no longer has [Person carrying basket of groceries]

01:20

a ticker symbol stock options the prestige all of which are the fruits of

01:24

being public it's just owned by whoever bought it and they can do more or less

01:28

whatever they want with it at this point they don't have to file public quarterly

01:32

reports they don't have to conform to federal disclosure laws for public

01:36

shareholders they can pretty much ignore the myriad costs of being public and

01:41

just run the business to grow and produce cash for shareholders yeah [People counting cash]

01:45

the benefits of going or being private