{"concept_id":"ALTSS-PE-009","slug":"take-private","canonical_name":"Take-Private","aliases":["public-to-private","P2P","going private transaction"],"kind":"transaction","authority":"industry","facets":["TXN"],"domains":["PRIVATE-EQUITY"],"display_title":"Take-Private","search_aliases":["what is a take private","take private private equity","go-shop vs no-shop","how does a public to private deal work","take private financing certainty"],"disambiguation":"Not to be confused with a fund tender offer in the secondaries market, which offers LPs liquidity for their fund interests.","one_sentence_definition":"A take-private is the acquisition of all the shares of a listed company by a private buyer, usually a private equity sponsor using a leveraged buyout structure, after which the shares are delisted and the company is privately owned.","plain_english":"A buyout fund offers to buy every share of a listed company, usually at a premium to the market price. If the board recommends the offer and shareholders and regulators approve it, shareholders are paid out, the company leaves the stock exchange and it becomes a private portfolio company. Because public shareholders are selling, the process is governed by company law, takeover rules and securities regulation, which makes it slower, more public and less flexible than buying a private company.","parent_concepts":["leveraged-buyout"],"child_concepts":[],"related_concepts":["control-premium","fairness-opinion","pipe","club-deal","co-investment","management-buyout","ipo-exit","portfolio-company"],"comparison_concepts":[],"not_the_same_as":[{"slug":"pipe","distinction":"A private investment in public equity (PIPE) buys a minority stake in a listed company that stays listed; a take-private buys all of it and delists it."},{"slug":"leveraged-buyout","distinction":"A leveraged buyout (LBO) describes control and debt financing; take-private describes a listed target. Most sponsor take-privates are LBOs, but most LBOs are of private companies."},{"slug":"tender-offer","distinction":"In the secondaries market a \"tender offer\" is a GP-arranged offer to buy LP fund interests; in public M&A it is an offer to a company's shareholders. The transactions share only the name."},{"slug":"spin-off","distinction":"A spin-off distributes a business to the parent's own shareholders; no outside buyer acquires it."}],"formula_ids":[],"worked_examples":[],"sections":[{"heading":"How a take-private works","paragraphs":["A sponsor typically approaches the target's board privately with a proposal. The board decides whether to engage, often through a committee of independent directors where a director or executive has a conflict; it hires financial and legal advisers, gives bidders access to non-public information under confidentiality agreements, and negotiates price and terms. The deal is implemented either as a negotiated merger or scheme approved by shareholders, or as a tender offer made directly to shareholders, depending on the jurisdiction and the target. Closing requires the approval or acceptance level set by law and the target's constitution, regulatory clearances (competition, foreign investment, sector regulators) and the financing. The shares are then delisted and the company becomes a [portfolio company](/glossary/portfolio-company) of the sponsor's fund."]},{"heading":"Board process and fiduciary review","paragraphs":["Directors owe duties to the company and its shareholders under the law of the jurisdiction of incorporation; the content of those duties varies, and this page does not summarise any one regime. In practice boards test an offer against the company's stand-alone value and its alternatives, commonly obtain a [fairness opinion](/glossary/fairness-opinion) from a financial adviser, and look for evidence that the price is the best reasonably available, through a market check before signing, a go-shop after signing, or both. Management conflicts need particular care. Executives who will roll equity into the buyer or receive a new incentive plan sit on both sides of the negotiation, which is why boards commonly use independent committees, control management's contact with bidders and disclose management arrangements to shareholders."]},{"heading":"Deal protection: no-shop, go-shop and break fees","paragraphs":["A no-shop clause bars the target from soliciting competing bids after signing. It usually carries a fiduciary out that lets the board respond to an unsolicited superior proposal and change its recommendation, subject to the original buyer's matching rights and a termination (break) fee. A go-shop clause instead gives the target a set window after signing to solicit competing offers actively, often with a lower break fee for a bidder that emerges during the window; a no-shop applies once the window closes. Whether these protections are permitted, and at what size, depends on the jurisdiction and the takeover regime."]},{"heading":"Financing certainty","paragraphs":["Public shareholders and target boards need confidence that a signed deal will close, so take-privates are financed with committed debt (commitment letters from banks or direct lenders with limited conditions) and an equity commitment letter from the sponsor's fund. The sponsor's acquisition vehicle usually has no other assets, so targets negotiate remedies such as a reverse termination fee payable if financing or regulatory approval fails, or a right to compel closing when the financing is available. Takeover rules in some jurisdictions add their own certain-funds requirements. Under the UK Takeover Code, for example, the announcement of a firm offer for cash must include confirmation by the offeror's financial adviser or another appropriate third party that resources are available to satisfy full acceptance of the offer (Rule 2.7(d)), and the offer document must repeat that cash confirmation (Rule 24.8). Very large take-privates are often shared through a [club deal](/glossary/club-deal) or with substantial [co-investment](/glossary/co-investment)."]},{"heading":"US securities-law points","paragraphs":["In the US, Rule 13e-4 under the Securities Exchange Act governs issuer tender offers: tender offers for a class of a company's equity securities made by the company itself or by an affiliate of the company. Such an offer must stay open for at least 20 business days from commencement. A tender offer by an unaffiliated sponsor's acquisition vehicle for a target's shares is a third-party tender offer and falls under separate rules of the Securities and Exchange Commission (SEC); a sponsor that is already an affiliate of the target, such as a controlling shareholder, falls within the issuer tender offer definition. Rule 14e-1 applies to tender offers generally, including a sponsor's: subject to limited exceptions in the rule, the offer must be held open for at least 20 business days from the date it is first published or sent to security holders, and for at least ten business days after a change in the consideration offered or in the percentage of securities sought. The disclosure rules for third-party offers and the additional rules for going-private transactions involving affiliates are not summarised here."]},{"heading":"Why sponsors take companies private, and what can go wrong","paragraphs":["Sponsors pursue take-privates when they believe the market undervalues a company, when a turnaround or investment programme is easier without quarterly public reporting, or when a listed company's size and cash flows can support a [leveraged buyout](/glossary/leveraged-buyout) structure. The risks are specific to public targets. The bid premium, a form of [control premium](/glossary/control-premium), is paid at entry; leaks move the share price; competing bidders or activist shareholders can force the price up; shareholders can vote the deal down; and diligence is limited to what the board will share. After delisting the company stops public equity reporting, although debt it issues in capital markets can carry its own reporting obligations, and the sponsor's eventual exit may be a return to the market through an [IPO](/glossary/ipo-exit)."]}],"classification_rules":["Classify as a take-private when the target's equity is listed at announcement and completion leaves it wholly privately owned and delisted.","A minority purchase in a listed company is a PIPE or public-market stake, not a take-private.","An acquisition of a listed company by a strategic buyer is public M&A; private equity usage does not normally call it a take-private, although the target is delisted."],"calculation_rules":[],"common_mistakes":["Citing Rule 13e-4 as the rule for an unaffiliated sponsor's tender offer. It covers issuer tender offers, made by the target company or an affiliate of it.","Describing deal-protection mechanics from one jurisdiction as universal.","Treating the announced premium as the sponsor's expected return. It is the price of control, paid at entry.","Overlooking management's conflict when executives roll equity into the buyer.","Assuming a signed take-private will close. Shareholder votes, regulatory reviews and competing bids can stop it."],"edge_cases":["A controlling shareholder (a founder or parent company) buying out the remaining public shares faces heightened conflict scrutiny in many jurisdictions.","A purchase that leaves a public float keeps the company listed: it is a control acquisition, not a take-private.","A company incorporated in one country and listed in another may be subject to more than one takeover and securities regime.","Founders, managers or large holders often roll part of their shares into the private company instead of selling."],"external_standard_mappings":[],"source_ids":["SRC-UK-TAKEOVER-CODE-R2-7","SRC-US-ECFR-240-13E-4","SRC-US-ECFR-240-14E-1"],"citations":[{"source_id":"SRC-US-ECFR-240-13E-4","pinpoint":"17 CFR 240.13e-4(a)(2), (f)(1)","supports":"Issuer tender offer means a tender offer made by the issuer or by an affiliate of the issuer for its equity securities; it must remain open at least 20 business days from commencement","source":{"source_id":"SRC-US-ECFR-240-13E-4","title":"17 CFR 240.13e-4 - Tender offers by issuers","publisher":"U.S. Securities and Exchange Commission (CFR text via eCFR; LII mirror)","document_type":"regulation","url":"https://www.law.cornell.edu/cfr/text/17/240.13e-4","publication_date":"eCFR current as of 2026-09-29; last amended 2019-01-14","jurisdiction":"US","status":"in force","last_verified":"2026-10-01"}},{"source_id":"SRC-US-ECFR-240-14E-1","pinpoint":"17 CFR 240.14e-1(a)-(b)","supports":"Any tender offer must be held open at least 20 business days from first publication (60 calendar days for certain registered roll-ups) and at least ten business days after a change in the percentage sought, the consideration offered or the dealer's soliciting fee (2% acceptance exception)","source":{"source_id":"SRC-US-ECFR-240-14E-1","title":"17 CFR 240.14e-1 - Unlawful tender offer practices","publisher":"U.S. Securities and Exchange Commission (CFR text via LII)","document_type":"regulation","url":"https://www.law.cornell.edu/cfr/text/17/240.14e-1","publication_date":"Current CFR text as published by LII (accessed 2026-10-01)","jurisdiction":"US","status":"in force","last_verified":"2026-10-01"}},{"source_id":"SRC-UK-TAKEOVER-CODE-R2-7","pinpoint":"Takeover Code Rule 2.7(a), (d); Rule 24.8","supports":"UK cash confirmation by the financial adviser or another appropriate third party in the firm offer announcement and the offer document","source":{"source_id":"SRC-UK-TAKEOVER-CODE-R2-7","title":"The Takeover Code, Rule 2.7 (announcement of a firm intention to make an offer) and Rule 24.8 (cash confirmation)","publisher":"The Panel on Takeovers and Mergers","document_type":"regulation","url":"https://code.thetakeoverpanel.org.uk/tp/rules/rule-2/rule-2-7.html","publication_date":"Online Code as published by the Panel (accessed 2026-10-02)","jurisdiction":"UK","status":"in force","last_verified":"2026-10-02"}}],"faq":[{"q":"What is the difference between a go-shop and a no-shop?","a":"A no-shop bars the target from soliciting other bids after signing, though the board can usually respond to an unsolicited superior proposal. A go-shop lets the target actively seek better offers for a set period after signing before a no-shop applies."},{"q":"Why do private equity firms take public companies private?","a":"Usually because they believe the shares are undervalued, because a long restructuring or investment programme is easier away from quarterly reporting, or because the company's cash flows can support a leveraged structure that public shareholders would not accept."}],"seo":{},"first_published":null,"last_reviewed":"2026-10-02","last_modified":"2026-10-02","content_version":"2.0.0","url":"https://altss.com/glossary/take-private","json_url":"https://altss.com/reference/concepts/take-private.json","title":"Take-Private","formulas":[],"sources":[{"source_id":"SRC-UK-TAKEOVER-CODE-R2-7","title":"The Takeover Code, Rule 2.7 (announcement of a firm intention to make an offer) and Rule 24.8 (cash confirmation)","publisher":"The Panel on Takeovers and Mergers","document_type":"regulation","url":"https://code.thetakeoverpanel.org.uk/tp/rules/rule-2/rule-2-7.html","publication_date":"Online Code as published by the Panel (accessed 2026-10-02)","jurisdiction":"UK","status":"in force","last_verified":"2026-10-02"},{"source_id":"SRC-US-ECFR-240-13E-4","title":"17 CFR 240.13e-4 - Tender offers by issuers","publisher":"U.S. Securities and Exchange Commission (CFR text via eCFR; LII mirror)","document_type":"regulation","url":"https://www.law.cornell.edu/cfr/text/17/240.13e-4","publication_date":"eCFR current as of 2026-09-29; last amended 2019-01-14","jurisdiction":"US","status":"in force","last_verified":"2026-10-01"},{"source_id":"SRC-US-ECFR-240-14E-1","title":"17 CFR 240.14e-1 - Unlawful tender offer practices","publisher":"U.S. Securities and Exchange Commission (CFR text via LII)","document_type":"regulation","url":"https://www.law.cornell.edu/cfr/text/17/240.14e-1","publication_date":"Current CFR text as published by LII (accessed 2026-10-01)","jurisdiction":"US","status":"in force","last_verified":"2026-10-01"}]}