The New CFO Financial Leadership Manual, Second Edition

Chapter 17. Taking a Company Private

Many companies find that the cost and liability of operating a publicly owned business is not worth the hassle, and elect to remove themselves from public trading. This involves the filing of a lengthy schedule with the Securities and Exchange Commission (SEC), which is described in this chapter.

Going Private Transaction

If a publicly held company wishes to go private, it must disclose information that is itemized under the SEC’s Rule 13E-3. This rule applies to situations where a company plans to buy back its securities, as described in the next section.

The information required under these circumstances must be filed on Schedule 13E-3, to which amendments must be added if there are material changes to the information presented on it. The primary information listed on the schedule includes complete company financial statements and various financial information on a per-share basis. The company must also include information regarding the identity of the persons filing the schedule, terms of the arrangement, future plans, the reason for going private, and the source and financing terms for the funding required to complete the transaction.

Rule 13E-3

The SEC’s Rule 13E-3 applies to any transaction where equity securities are being purchased by their issuer or when a tender offer for those securities is being made by their issuers or an affiliate. Such a transaction must result in having less than 300 people hold the equity security or the removal of ...