Tanking a Small Cap Company private ($ Rev. ~$50m-$80m)
Hi Everyone, I am preparing a list of potential targets for two PE funds. One is a new small-cap fund, currently fundraising and investing own equity the second one is a third fund investing out if $130m. I identified several interesting targets that are respectively in the size scope of these companies. However, these companies are public. Only a minority of their shares are respectively listed and these are low volume stocks. How much hustle would it be for the PE funds to take them private? Do you believe any of this funds would actually consider such targets? Thanks a lot in advance!
While I was in banking I worked on the buy-side with a large PE shop to take a 1/2 Billion dollar publicly-traded company private. The deal closed but the PE shop had quite a bit of manpower and capital. Unlike your example, the public float was ~90%. The deal took over a year and was pretty grueling.
Now I am at a lower-MM LBO shop (~$200mm in Fund II). Surprisingly we recently got a book on a small-cap public company. We took a quick look and decided the deal was too hairy for us. The company had a crazy cap structure and was in distress. I guess you can say we "considered" it, but it is extremely rare for us.
In my experience, it would require a lot of hustle and generally smaller funds won’t mess with them.
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