Take a Public Company Private with the Help of A Go-Private Transaction Advisor
Whether through a Management Buyout or takeover, going private transactions in Canada can be a complex process. To navigate the regulatory considerations, and ensure value maximization for all shareholders, an independent business valuator and transaction advisor are crucial to the success of a going private transaction.
Beacon Advisors have over 20 years of experience consulting and partnering with firms throughout the public and private sectors. We understand the intricacies involved in public companies going private, and can provide guidance from valuation, to Letter of Intent, to closing.
The Beacon Advisory team offers the full suite of going private advisory services, through a highly personalized lens. Our certified valuators provide independent valuations of the target, while our going private advisory team assists in due diligence, financing, and negotiations.
Recent Advisory Transactions
Why Take a Company Private?
Depressed Share Prices
Due to high uncertainty, many smaller public companies face depressed share prices. Given the added responsibilities associated with the maintenance of a public company, it may be more advantageous to go private, sourcing capital by borrowing money without giving up ownership. If looking to take a target company private, depressed share prices represent an excellent opportunity to buy out existing shareholders at a discount. Beacon advisors’ transaction services can assist in identifying ideal public companies to take private.
Regulatory Requirements
Regulations make running a public company a complex and costly affair. Focusing on quarterly deadlines, profits, and meeting regulation can be a tedious and time-consuming procedure for management teams. Depending on the size of the business, a company can be run more effectively if taken private through the help of a going private transaction advisor.
Recurring Costs
Public companies are required to pay recurring expenses to meet growing regulatory requirements. These costs are purely associated with being a public company, and however significant, are not impactful on the operations of the business. A significant amount of money can be saved if the company is taken private. Documenting and comparing the costs of a private and public company is part of the going private transaction advisory process. When looking for public companies to take private, Beacon Advisors’ going private transaction advisory team can help identify businesses that face costs too high to justify remaining public.
Beacon Advisors’ Going Private Transaction Process
Assessing the Target
If you are an existing shareholder, or outside investor, our go-private advisory team assess the viability of the going private transaction, undertaking a thorough due diligence process to break down the risks, industry metrics, and growth prospects of the potential target. Our Chartered Business Valuators and valuations team provide an accurate valuation of the target, analyzing its value intrinsically and compared to its peers. Our going private transaction advisors identify the correct share purchase price, including the most viable premium to pay for the private transaction.
Financing
At this stage our debt financing and go-private transaction team provides financing solutions. Our proprietary relationships with private credit funds, commercial banks, lenders, and private equity funds help to provide you with options to source the appropriate amount of leverage at the right rates to allow for good return.
Negotiations
Finally our going private transaction advisory team assists in the preparation of the letter of intent and negotiating the agreement to get the best deal for every shareholder. With over two decades of experience in M&A negotiations, you can rest assured that we will be able to create a favorable deal.
Recent Beacon Advisors’ Blog on Taking Companies Private
In order to remain listed on the Toronto Stock Exchange or the TSX Venture exchange, public companies must comply with a list of regulatory requirements including, but not confined to, quarterly and annual filings, management discussion and analysis, management certifications, disclosures of material changes, and corporate governance disclosures.
Considering the various mechanisms at play for a going private transaction can be a complex task; even more so when deciding on the right offer price. Although negotiations, initial valuation, and market conditions all come into play when deciding on an offer price, offerors must consider and be aware of the methods and sources behind the value of the take-private target in order to find the perfect price.
Frequently Asked Questions About Selling or Buying a Business
Taking a company private comes with a tremendous amount of legal and financial considerations. Understanding how the going private transaction process works and how to ensure every shareholder is on board can be overwhelming for even the most seasoned of finance professionals. Beacon Advisors going-private transaction services provide solutions and guidance for all aspects of the going-private process; from acquiring financing, to letter of intent negotiations, to guideline considerations.
In Canada, a going private transaction can happen in one of 3 ways:
- Amalgamation – In this process a public company combines with another private company or a company that is in process of going private.
- Take-over Bid – In this case, the shareholders of the target public company solicit a bid to take the company private. Once an agreement is reached, the securities of existing shareholders are tendered to the bidder.
- Plan of Arrangement – This is a court-sanctioned process in which a company might be required to reorganize itself and get acquired through a tender of shares to the acquirer.
A public company is a company whose shares are listed on a regulated stock exchange. In order to comply with these regulations, a public company must periodically file reports to disclose its operational and financial health to its shareholders. Consequently, public companies might incur additional administrative costs. On the other hand, a private company is fully owned by one or more shareholders, and the only way to acquire ownership in such a company would be by acquiring shares directly from the owners. Private companies have lower SG&A expenses as they do not have to worry about regulatory filings and disclosures, however, these companies have an added liquidity risk as they cannot raise money through capital markets.
As the shareholder of a public company, you may consider going private for multiple reasons. The company might be under attack from short sellers and as a result, the management might consider a buyout to focus on operations and growth. The company might also be going through challenges and might find the administrative costs associated with being listed expensive. In this situation companies can consider going private in order to save costs and focus on strategy. These are some of the reasons that a company might consider going private.
