I am looking to perform a buyout on a public company but I do not want to delist the firm. I know I can just buy up shares on the market and buy a controlling interest but for a few reasons I do not want to do this. I would prefer to make a tender offer for the firm. However as the company continues to grow I will need to take advantage of the public listing to raise additional capital and would prefer to utilize a public share sale to do so with out needing to spend time and money relisting the firm.
Anyone know of a way to do this?
following
https://www.lw.com/admin/Upload/Documents/For%20Links/Guide-to-Acquirin…
^ above should be helpful overview.
Most PE firms avoid the tender offer because if they don't acquire 90% of the outstanding shares, they will have to exercise a second TO to try and gain the 90% threshold to execute a statutory merger and de-list the company. The remaining minority holdouts then have a ton of negotiating leverage as the PE firms seek to clinch that 90%.
In your case, sitting with >50% shares but less than 90% is the actual goal. A TO that conditions its effectiveness on >50% shares being tendered sounds like a good way to do this.
However, I think you might run into corporate governance issues. Even with >50% of the shares, I think there's a lot of rules in DGCL / even stock exchange rules that don't allow a controlling shareholder to bulldoze over minority shareholders. They'll be some requirement for independent directors on the Board -- perhaps even >50% of the Board be independent despite you holding >50% of the shares. Given those minority shareholder protections, you'll have to put some thought as to how you will actually get true control (e.g., perhaps an associate of yours qualifies as an independent director and you can trust that they will see eye-to-eye with you)
If you mean "buyout" in the traditional sense with debt financing, you might want to check whether you'll have control to direct the business to recapitalize itself. My understanding is that TO's have to be all equity financed, another reason why PE firms shy from take-privates using a TO
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