Public to private transactions

Prior to the onset of the Covid-19 crisis, an increasing number of public takeovers by PE sponsors (P2Ps) had been seen in the market and there is potential for this type of activity to build again as the deal market picks up, with opportunities expected to arise as a result of depressed share prices and companies needing capital to invest in growing and rebuilding their businesses.

We have put together a three part series on P2Ps to provide a top level overview of how these transactions work in practice from different perspectives. 

Part 1: sponsor perspective

Comparing a typical private M&A deal to a typical P2P transaction

The majority of acquisitions by PE sponsors in recent times have involved highly competitive auctions, ending with a sale and purchase agreement, which, although privately negotiated, will generally follow market conventions in form and content. Once signed, this agreement guarantees that the buyer will acquire the asset (subject to whatever conditions need to be satisfied, waived or fulfilled by closing).

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Part 2: perspective for boards and management of listed companies

Board and management of a listed company which may be the target of a P2P offer

When PE sponsors propose a public to private takeover bid (P2P), this has material implications for the current board in terms of fiduciary duties, possible conflicts of interest and all the stakeholders in the business. Part 2 considers the perspective of the board and management of a listed company which may be the target of a P2P offer:

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Part 3: financing

Financing of P2Ps by PE sponsors

Raising sufficient cash on acceptable terms to complete the acquisition of often large and widely-held enterprises is no mean feat. However, with diversified and well capitalised communities of investors and lenders ready to grasp opportunities, sponsors and their financiers need not look upon P2Ps as, in principle, significantly more difficult to finance than private M&A deals.

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