What is “going private”?
Going private is the transaction in which a publicly-traded company is taken off the stock exchange: typically by a buyout from a private equity firm, the management team, the founders, or a strategic acquirer. The purchase is funded by a mix of equity and debt, with the goal of restructuring or operating the company away from public-market scrutiny. The reverse is “going public” (an IPO).
Why companies go private
- Long-term restructuring: public markets demand quarterly performance; private ownership allows multi-year transformation without quarterly noise.
- Operational simplicity: escape SEC filings, earnings calls, analyst coverage, and the cost overhead they create.
- Concentration of decision-making: remove the distributed shareholder base and consolidate around a small number of owners.
- Valuation arbitrage: when the public-market valuation is depressed but private-market buyers see fundamental value, going private captures the spread.
- Take-private leverage: the buyout is funded with significant debt; the new owner intends to deleverage from cash flow over time.
The mechanics
- Tender offer or merger: the acquirer offers shareholders a per-share price (typically 20-40% premium to recent trading price).
- Fairness opinion: independent advisor confirms the price is fair to shareholders.
- Shareholder vote: majority approval required (specific threshold varies by jurisdiction and corporate documents).
- Delisting: after close, the shares are removed from the exchange.
Going private vs. related concepts
- Going private vs. buyout: a buyout is the broader category (private companies can also be bought out); going private specifies the public-to-private transition.
- Going private vs. LBO: a leveraged buyout is the financing structure most commonly used for going-private transactions, but not the only one.
- Going private vs. take-private: the two are synonyms.
Going Private in the Turkish Market
On the Turkish public market (BIST), going-private transactions are relatively rare, and the ecosystem is less mature than its global counterparts. The Capital Markets Board (SPK) communiqués and the transaction approval processes under the Turkish Commercial Code (TTK) are more staged than their global equivalents, and minority shareholder protection is particularly prominent.
Practical Considerations
- Assess the post-transaction operating thesis: going private only adds value if the new owners can run the company differently from the way the public markets would allow.
- Do not assume that going private removes governance pressure: debt covenants from take-private financing often create their own discipline.