Going-Private Transactions: Strategic Considerations

The adverse operating environment in many industries has generated increased interest in taking public companies private. In making or responding to taking private offers, counsel must understand the regulatory framework and consider appropriate procedural safeguards to address litigation and other risks. As in any M&A transaction, the deal process and strategy can have a significant impact on the outcome.

Federal securities laws that apply to any acquisition of a public company apply to going-private transactions as well. Under Rule 13e-3 of the Exchange Act, a going-private transaction may be subject to heightened disclosure requirements. Given the heightened SEC scrutiny and the likelihood of breach of fiduciary duty and other lawsuits, counsel must approach these transactions strategically and cautiously.

Going-private transactions are generally structured as either a one-step or a two-step merger. Either approach involves the bidder presenting its proposal to purchase the public company target, negotiations with the target company, and approval by the target board of directors. The board will need to determine the status of the bidder--whether a controlling stockholder or a third-party buyer--and take steps to avoid any conflicts of interest and assess alternatives for superior value.

Listen as our authoritative panel provides a deep-dive into going-private transactions, including the strategic considerations, fiduciary duty issues, procedural safeguards, and required disclosures.