Going Private

What does 'Going Private' mean

Going private is a transaction or a series of transactions that convert a publicly traded company into a private entity. Once a company goes private, its shareholders are no longer able to trade their stocks in the open market. Private equity firms will typically purchase a struggling company, make it into a private entity, reorganize its capital structure, and issue stocks once a profit can be realized.

BREAKING DOWN 'Going Private'

A company typically goes private when its stakeholders decide that there are no longer significant benefits to be garnered as a public company. Privatization will usually arise either when a company's management wants to buy out the public shareholders and take the company private (a management buyout), or when a company or individual makes a tender offer to buy most or all of the company's stock. Going private transactions generally involve a significant amount of debt.


Companies are often taken private when they need time to restructure their debt or operations prior to becoming a public corporation once again.

RELATED TERMS
  1. Privatization

    1. The transfer of ownership of property or businesses from a ...
  2. Private Equity

    Private Equity is equity capital that is not quoted on a public ...
  3. Private Company

    A company whose ownership is private. As a result, it does not ...
  4. Repackaging

    When a private equity firm takes a public firm private by purchasing ...
  5. Private Currency

    Units of value issued by private companies or organizations. ...
  6. Private Buyer

    An individual or organization that is purchasing an asset and ...
Related Articles
  1. Managing Wealth

    How To Invest In Private Companies

    It can be tough to invest in a company that doesn't trade on an exchange, but there are also several advantages.
  2. Managing Wealth

    How To Invest In Private Companies

    Owning a private firm means sharing more directly in the underlying firm’s profits.
  3. Investing

    Advantages of Public Vs. Private Companies

    A privately held company is owned by its founder, management or a group of private investors.
  4. Investing

    Why Companies Stay Private

    Many private companies prefer to stay private and find alternate sources of capital. Find out what firms have to gain by eschewing the windfall from a flashy IPO.
  5. Managing Wealth

    Explaining Privatization

    For a publicly traded company, privatization is the act of transitioning the company to ownership by private individuals.
  6. Investing

    What is a Private Company?

    A private company is any corporation that does not have shares publicly traded in the equity markets.
  7. Investing

    Valuing Private Companies

    Even though they’re typically not accessible to the average investor, private firms often raise money through venture capital or private equity investments.
  8. Investing

    A Primer On Private Equity

    Private equity investing is becoming more accessible for individual investors; find out how you can get involved.
  9. Managing Wealth

    Valuing Private Companies

    You may be familiar with publicly-traded companies, but how much do you know about privately-held firms?
  10. Managing Wealth

    Private Equity Fundamentals

    Investopedia explains what private equity is through a concise video.
RELATED FAQS
  1. How does privatization affect a company's shareholders?

    The most recognized transition between the private and public markets is an initial public offering (IPO). Through an IPO, ... Read Answer >>
  2. What are some of the key reasons a large corporation might prefer to remain a private ...

    Understand the reasons why a large corporation would want to remain as private instead of going public through an initial ... Read Answer >>
  3. What's the difference between publicly- and privately-held companies?

    Privately-held companies are - no surprise here - privately held. This means that, in most cases, the company is owned by ... Read Answer >>
  4. What kinds of private equity investments are out there? (APO, BX)

    Learn why private equity can be so profitable and how to buy this type of investment often reserved for institutional and ... Read Answer >>
  5. Why are private equity investments usually reserved for rich people?

    Learn what investors without a high net worth can do to invest in private equity investments, and discover the benefits and ... Read Answer >>
  6. How does the privatization of a publicly traded company work?

    Find out how a publicly traded company can privatize and remove itself from listed stock exchanges and out from under the ... Read Answer >>
Hot Definitions
  1. Quantitative Trading

    Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify ...
  2. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  3. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  4. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  5. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  6. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
Trading Center