Going-Private Transaction
A going-private transaction occurs when the issuer or affiliate of a publicly traded company acquires all of the outstanding stock. This is accomplished by merger, tender offer, or reverse stock split and requires cash to complete the transaction. The publicly traded stock is delisted from the applicable exchange(s), shares are deregistered with the Securities and Exchange Commission, and minority shareholders are cashed out.
The benefits of going private include simpler corporate governance requirements, cost savings associated with Sarbanes-Oxley compliance and the preparation of 10-K, 10-Q, and 8-K filings, elimination of personal liability for the CEO and CFO relative to financial statement certification under SOX Section 302, and reduced disclosure requirements concomitant to executive compensation and other sensitive business information.
