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Hey, if a company decides to go private what does that mean for the shareholders of that company?
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Privatisation
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Whiskers
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If you mean as in Pty Ltd, then the main points are that it won't be able to trade on the stock market and or raise funds from the public.
Current hareholders will have to contribute capital if required or the company will have to borrow funds.
The reporting requirements are less stringent and private.
Sometimes a public company can be taken over by another public company and made a PTY LTD subsiduary. In this case public shareholders would have to be bought out via a takeover or similar.
Current hareholders will have to contribute capital if required or the company will have to borrow funds.
The reporting requirements are less stringent and private.
Sometimes a public company can be taken over by another public company and made a PTY LTD subsiduary. In this case public shareholders would have to be bought out via a takeover or similar.
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I have read (therefore i'm not sure if it is correct or not)...that the said company has had evaluations done and their stock has been valued at about $5ish, however, the current share price is about $1.95...so if they were to go private and buy back the share would it be likely they would pay higher, lower, or around the actual share price? I'm just looking to gauge some opinions.
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generally the share holders will be bought out in a take over,
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they would be looking to get it as cheaply as possible, however they would more thean likly be forced to pay a price higher than the current share price.
For example, they have to offer a price that is high enough to get 90% of share holders to accept.
At any one time only 1% of shares might be trading on the market, so just because 1% of share holders / traders are willing to sell their shares at $1.95 does not mean all the rest will, so the entity conducting the take over will generally offer a premium to the current trading price eg. $2.50 per share to try and get 90% of share holders to commit.
Once 90% have commited the company can compulsoryly aquire the other 10% at the take over price.
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Thanks for that very helpful.
Whiskers
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Often someone will have a substantial holding in the company before announcing a takeover/privatisation... often in cash. Their interest may give a clue to the achievable value of the takeover target value... ie whether there will be a competing offer.
Also, a bit of a variation is that sometimes that substantial shareholder entity, particularly if it's a public company, may want to privatise the takeover target as a subsiduary and you might be offered shares, or part shares in the offeror or related entity and part cash... in which case the valuation of the entity would need to be considered post takeover rather than current value.
It can be a rewarding situation when you do your research and play your cards right.
Also, a bit of a variation is that sometimes that substantial shareholder entity, particularly if it's a public company, may want to privatise the takeover target as a subsiduary and you might be offered shares, or part shares in the offeror or related entity and part cash... in which case the valuation of the entity would need to be considered post takeover rather than current value.
It can be a rewarding situation when you do your research and play your cards right.
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