How does a public company go private? Don’t they have to convince all shareholders to sell back their shares?

Question

How does a public company go private? Don’t they have to convince all shareholders to sell back their shares?

In: 19

Answer 1

Typically the acquirer will arrange for the target to merge with a subsidiary. Under state corporate law, the merger agreement can provide that shareholders of the target get cash instead of shares in the subsidiary. The target shareholders have to vote to approve the merger, but holdouts don’t have the choice to hang on to their shares.