Going Private
The process of converting a publicly traded company into a private company, removing its shares from a stock exchange.
What is Going Private?
Going private is the process by which a public company's shares are delisted from a stock exchange, removing it from public ownership and SEC reporting obligations. The most common mechanism is a leveraged buyout (LBO), where a private equity firm acquires all outstanding shares, often financed primarily with debt. Management buyouts (MBOs) are a related form where executives acquire the company themselves. Motivations include avoiding the costs and burdens of public company regulation (Sarbanes-Oxley compliance, quarterly earnings pressure), executing a turnaround without public scrutiny, or realizing value that markets have not priced appropriately. Shareholders receive a cash premium over the pre-announcement market price.
Example
Dell Technologies went private in 2013 in a $24.4 billion leveraged buyout led by founder Michael Dell and Silver Lake Partners, one of the largest go-private transactions in history. Dell cited the need to execute a multi-year transformation away from PCs toward enterprise IT services without being subject to short-term quarterly earnings pressure. Dell returned to public markets via a reverse merger with VMware in 2018.
Source: SEC — Going Private Transactions