Going Private

A listed company goes private when a buyer acquires the public shares, the stock leaves the exchange, and the company becomes eligible to stop filing as a public registrant. The cash price is usually a premium to the undisturbed trading price. If the buyer is a private equity sponsor, the same close is a public-to-private leveraged buyout (LBO): debt sits on the company, and equity comes from the fund and often from partners. Sources, uses, and the three return levers still decide whether the hold works. The public path adds a premium to a printed price, a board process, and a delisting.

People use three labels for overlapping facts. Going private is the Securities and Exchange Commission's phrase when an issuer or an affiliate causes a class of equity to be deregistered or delisted, and Rule 13e-3 of the Securities Exchange Act of 1934 may apply. Take-private, or public-to-private (P2P), is how deal teams describe a sponsor or a consortium buying a listed company and taking it off the tape. Going dark is different. The company delists and tries to exit reporting without cashing out every public holder.

How a going-private transaction works

The buyer wants all of the equity, or enough of it that the remaining public float can be squeezed out and the listing ended. In a sponsor deal the fund (or a club of funds, sometimes with a sovereign wealth partner) stands up an acquisition vehicle, agrees a price with the target board, funds the close with equity and new company-level debt, and files the merger or tender materials the public process requires.

The sequence is longer than a private auction.

1. A bidder approaches the board, or the board runs a sale. Once a formal offer is a material event, the target files a Form 8-K.
2. Independent directors, often as a special committee, hire counsel and a financial advisor, test the price, and, in a conflicted deal, run a process that can survive later review.
3. The parties sign a merger agreement. Financing commitments sit behind it. A financing condition in a US public deal is rare; the bidder's walk-away is usually a reverse termination fee if debt does not fund.
4. Shareholders vote on a one-step merger, or tender into a two-step offer. Appraisal rights may be available under the company's state of incorporation.
5. At close, public holders receive the merger consideration, almost always cash. The stock is delisted. The surviving company files Form 15 when it has few enough holders of record, and Exchange Act reporting winds down.

A private company sale does not have that tape, that premium to a public print, or that disclosure clock. After close the company still services the stack. Getting there required the public process above.

Take-private, public-to-private, and Rule 13e-3

Deal teams, lawyers, and the Commission do not use the same words for the same file.

A take-private, or P2P, is the commercial deal: buy the listed company, pay the public, delist. Latham & Watkins' take-private guide splits that commercial deal three ways. A general take-private is any cash acquisition that ends public status, whoever the buyer is. A sponsor take-private is a private equity leveraged buyout of a listed company. A controller take-private is a controlling stockholder buying the shares it does not already own.

Going private, in the Commission's sense, is narrower. Rule 13e-3 applies when the issuer or an affiliate engages in a transaction that has the purpose or reasonable likelihood of causing a class of equity to become eligible for deregistration or delisting. Schedule 13E-3 then requires, among other items, that each filing person state whether it reasonably believes the transaction is fair or unfair to unaffiliated holders. The Commission's Corporation Finance interpretations (last updated 11 February 2026) treat senior management as affiliates of the issuer. A financial buyer that was unaffiliated at signing can become an affiliate for the rule if management will hold a material equity stake, sit on the surviving board, and help direct the company after close. Parties sometimes defer employment and rollover talks until after the shareholder vote to stay outside the rule. That is a process choice, not a loophole the staff ignores when the understanding already exists.

Going dark is the other off-ramp. The company files to delist and to terminate or suspend reporting because the holder-of-record count already qualifies, without a merger that cashes out the public. Shares may still trade over the counter. There is no going-private premium because nobody bought the float. A Form 25 delisting without a cash-out of the float is not a take-private.

Why companies go private

Public listing buys liquidity, a currency for acquisitions and compensation, and a price the market prints every day. It also buys a reporting calendar, analyst estimates, and the cost of staying current under the Exchange Act and the Sarbanes-Oxley Act of 2002. A 2025 Government Accountability Office analysis of Sarbanes-Oxley compliance, cited in LegalClarity's take-private explainer, put internal compliance costs at roughly $700,000 a year for single-location companies and around $1.8 million for firms with more than $10 billion in revenue, before audit fees.

Boards take a bid when they think that price, plus the chance to run the company off the quarterly tape, beats staying listed. The usual reasons are a stock the board thinks is cheap relative to the plan, a restructuring that would look ugly in a 10-Q, an activist pushing a sale, or a sponsor that can write a check the public market will not. BDO's 9 July 2026 take-private guide adds a 2025 wrinkle: thinly traded companies that came public through special purpose acquisition companies, paying public-company costs without public-company benefits.

For the sponsor, a listed target is a sourced file with public financials and no banker auction on day one. White & Case's 24 February 2026 note on US take-privates recorded 41 sponsor-backed US deals in 2025, valued at $242.9 billion, more than double 2024's $104.3 billion. Bain & Company's 17th Global Private Equity Report (23 February 2026) says public-to-private transactions represented roughly half of 2025's global buyout deal-value growth, and that the Electronic Arts close set a new all-time buyout record. Those figures describe the top of the market. They are not a census of every middle-market file.

One-step merger and two-step tender

US cash take-privates are built as a voted merger or as a tender offer followed by a back-end merger. The economics can be the same. The clock is not.

In a one-step merger the parties sign, file a proxy statement (Schedule 14A), wait out SEC review if the staff comments, hold a shareholder meeting, and close after the vote and any regulatory waits. Delaware corporations typically need a majority of outstanding shares, not only of votes cast. The calendar is measured in months.

In a two-step deal the buyer launches a tender offer for the shares, files a Schedule TO, and the target files a Schedule 14D-9 with the board's recommendation. SEC tender-offer rules keep the offer open at least 20 business days. If enough shares come in, the buyer closes the tender and then merges out the stub. Delaware's short-form merger for a parent that owns at least 90 percent of each class can skip a second stockholder vote. Delaware Section 251(h) lets some two-step deals complete a back-end merger after a tender for a majority, without the 90 percent threshold, when the merger agreement is set up that way. Two-step is often faster when financing is ready and antitrust is clean. It is slower when the tender hangs below the threshold the merger needs.

A reverse stock split that cashes out odd lots can reduce the holder-of-record count enough to deregister. It shows up on small, illiquid names. It is not how a sponsor takes out a large-cap.

A management buyout is a roster change, not a fourth legal form. Incumbent managers initiate or join the bid, roll equity, and keep running the company. A sponsor almost always writes most of the check. The conflict is obvious: the people who know the numbers are also buying. Special committees, majority-of-the-minority votes, and fairness opinions exist for that file. The 2013 Dell transaction with Silver Lake is the usual example.

What public shareholders receive

Holders of record get cash for each share, at the deal price, when the merger closes or when they tender. They do not keep a liquid stub in the surviving company unless the deal is structured that way, which sponsor take-privates almost never are.

The premium is the gap between that cash and the unaffected price, the last close before the deal leaked or was announced. Pipeline Road's take-private note puts a typical range at 20 to 40 percent. LegalClarity's process page puts common figures at 20 to 50 percent. Neither is a rule. Electronic Arts' 29 September 2025 agreement paid $210 a share, a 25 percent premium to the unaffected close of $168.32 on 25 September 2025. Hilton Hotels' 2007 Blackstone sale, on the leveraged buyout page, was 40 percent. The premium has to be high enough that a fairness opinion will say the price is fair and that holders actually tender or vote. It has to be low enough that the sponsor can still underwrite the hold.

Dissenters who think the cash is light may have appraisal rights under Delaware Section 262 (or the equivalent in another state). They forgo the merger consideration, demand appraisal in writing, and ask the court to set fair value. The court can come in above or below the deal price. It is a lawsuit with a valuation, not a free look.

When a controller or management sits on both sides, Delaware's *Kahn v. M&F Worldwide* framework gives the deal business-judgment review if, from the start, it is conditioned on an independent special committee and on a majority-of-the-minority stockholder vote. Skip those and the court applies entire fairness. That is why those conditions show up in the merger agreement on conflicted files.

Employee equity is a separate line in the merger agreement. Vested options usually cash out at the deal price minus the strike. Restricted stock units usually cash at the deal price. Unvested awards may accelerate, roll into new private-company equity, or be cancelled. The merger agreement and the equity plan, not the press release, set which path applies.

How sponsors pay for a take-private

The purchase price is still sources and uses. Equity from the fund (and from co-investors, rollover holders, and sometimes a sovereign wealth partner) plus new debt on the company have to cover the equity value, the refinance of existing net debt, and fees. The leveraged buyout page walks that arithmetic, including why 2026 mix is more equity and less debt as a share of enterprise value than a pre-crisis textbook.

A listed target changes three financing facts.

The check is large. Clubs and co-investment exist because one fund often will not speak for the whole equity line. The American Bar Association's February 2023 note on financing take-privates recorded equity sometimes north of 50 percent of sources, with sovereign wealth funds of Saudi Arabia, Singapore, Qatar, and the United Arab Emirates as regular co-investors on sizable LBOs. Electronic Arts' consortium funded about $36 billion of equity, including the Public Investment Fund rolling its 9.9 percent stake, and $20 billion of debt committed by JPMorgan, $18 billion of it expected at close. Equity is most of that check.

The merger agreement rarely lets the bidder walk because financing failed. Reverse termination fees and specific performance against the equity commitment papers are the target's leverage. Commitment letters have to be in shape at signing, not after the vote.

Debt can be syndicated loans and bonds, direct lenders, or both. After the 2022 Citrix hung-deal losses, large-cap take-privates spent a stretch in private credit. By 2025, White & Case's note had leveraged loan and private credit markets open enough again for jumbo files. The company's cash flow still has to service whatever stack closes. Coverage, sweep, and the three return levers are the leveraged-buyout close, not a second copy of that arithmetic.

After the ticker disappears

Delisting is an exchange filing. Deregistration is an SEC filing. They are not the same act. After the squeeze-out, the surviving company files Form 15 to terminate Exchange Act registration when it has fewer than 300 holders of record of the class (or fewer than 500 holders of record if assets have stayed under the Form 15 asset test). Reporting does not vanish on the filing date. Form 15 starts a 90-day clock unless the staff shortens it. Until then, residual 10-K, 10-Q, and 8-K duties can still apply.

The company is then a portfolio company. Public 10-Qs stop. Lender reporting, sponsor board packs, and monthly flashes start. BDO's warning is practical: a former public finance team is trained for quarterly GAAP, not for the operating key performance indicators a fund wants weekly. Value creation in the hold is still earnings growth, not the delisting.

Exits complete the loop: a trade sale, a sale to another fund, or a new listing. A take-private is not a promise to IPO again. It is a purchase that has to return cash to limited partners before the fund expires.

Large deals also clear antitrust. Under the Hart-Scott-Rodino Act, 2026 filing thresholds (Federal Trade Commission, as summarized on LegalClarity's process page) start at $133.9 million of transaction value. Most financial buyers who do not own a competitor clear. Concentrated industries do not always.

Examples

Two closes show the path. They are not a league table.

On 29 September 2025, Electronic Arts announced an all-cash sale to a consortium of the Public Investment Fund, Silver Lake, and Affinity Partners. The company release values EA at about $55 billion of enterprise value, $210 a share, a 25 percent premium to the unaffected price. Bain's 2026 report prints that public-to-private as a $56.6 billion buyout and the largest on record. Funding is about $36 billion of equity and $20 billion of committed debt. The board approved it. Closing is subject to stockholder and regulatory approval, then the common stock leaves the public market. That is a sponsor take-private with a sovereign partner, a voted merger, a printed premium, and a capital structure that is equity-heavy. It is not a 1980s 70 percent-debt raid.

In 2013, Michael Dell and Silver Lake took Dell private in a management-led buyout. Management initiated and rolled. The sponsor supplied capital the managers could not. The later return to the public market is a separate exit, not part of the going-private mechanics.

Elon Musk's 2022 purchase of Twitter (now X) was a take-private in the commercial sense: cash for public shares, then a delisting. It was not a private equity fund LBO. Wall Street Prep uses it as a worked example. It is a strategic or individual buyer, not a sponsor fund.

Hilton's 2007 Blackstone close belongs on the LBO page, where the mortgage-and-mezzanine stack is the point. The public path that year was the same one: a premium, a stockholder vote, a delist.

What can go wrong

A take-private can fail before close: the vote misses, a tender hangs, a regulator objects, or litigation delays the meeting. It can close and still be a bad underwrite. The premium is paid on day one. The earnings path that was supposed to justify it is a forecast. If cash flow cannot service the new debt, the company, not the rest of the fund, is in distress. That risk is the LBO.

Process risk sits in the filings and the committee. A cheap bid without a special committee invites entire-fairness litigation. A 13e-3 file that buries the fairness belief, or that pretends management is not on both sides, draws staff comments and a longer clock. A reverse termination fee that is small relative to the equity check gives the bidder an option, not an obligation. Boards price that option when they choose a partner.

For a candidate, the public-to-private is the associate file with more lawyers: a proxy or offer to purchase instead of a private CIM, a premium to an unaffected price instead of a banker auction range, and a financing package that has to be committed at signing. Open investing seats sit on Private Equity Jobs. Firm names sit in the companies directory.

Sources

Bain & Company 17th Global Private Equity Report press release, 23 February 2026, for public-to-private share of 2025 deal-value growth and the Electronic Arts buyout as a record. Electronic Arts, agreement to be acquired, 29 September 2025, for $55 billion enterprise value, $210 a share, 25 percent premium, $36 billion equity, and $20 billion JPMorgan commitment. White & Case M&A Explorer, Jumbo deals push US take-private activity to new heights, 24 February 2026, for 41 US take-privates and $242.9 billion of 2025 value. SEC Division of Corporation Finance, Going Private Transactions, Exchange Act Rule 13e-3 and Schedule 13E-3 interpretations, last updated 11 February 2026. American Bar Association Business Law Today, Financing Private Equity Take-Private Transactions, February 2023.

What is a take-private?

A take-private is a deal in which a buyer acquires a listed company's public shares and delists the stock, converting the company to private ownership. When a private equity sponsor is the buyer, it is also a public-to-private leveraged buyout.

Is going private the same as a leveraged buyout?

Not always. Every sponsor take-private is an LBO of a listed company. A controller squeeze-out, a strategic cash merger, or an individual buyer can take a company private with little or no new company-level debt.

What happens to my shares?

You receive the merger or tender cash for each share, usually at a premium to the unaffected price. After close you do not own a listed stub. Appraisal is a separate election with its own procedure.

Does Rule 13e-3 apply to every take-private?

No. The rule applies when the issuer or an affiliate is engaged in a transaction that causes, or is reasonably likely to cause, deregistration or delisting. An unaffiliated third-party merger may sit outside the rule. Management rollover and post-close control can pull a sponsor deal inside it.

How is this different from going dark?

Going dark delists and seeks to end reporting because the holder-of-record count already qualifies. It does not cash out the public at a deal premium. A take-private buys the float, then delists.