MicroCap Take Private for Search?
I think that the Title says it all - Has anybody seen or heard of a searcher doing a MicroCap take private (say EV of roughly $15-50M) ?
Seems like it could be a great strategy?
What would the pitfalls be?
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by a searcher
from Cleveland State University
in Akron, OH, USA
in Akron, OH, USA
4yrs ago
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by a searcher
4yrs ago
from Marquette University in Seattle, WA, USA
from Marquette University in Seattle, WA, USA
I love the idea, but my gut says the Venn diagram of companies that are (1) public, (2) sub $50MM EV, (3) of sufficient quality that you'd want to buy, (4) financeable at decent LBO terms, and (5) not controlled by a family/mgmt team that would block the acquisition is very, very small.
Most of companies of that size that go public do so either because they were unable to raise capital in the private markets (see #3 and #4) or for vanity reasons (see #5).
I would also think the elevated deal costs (and maybe higher risk of closing, depending on shareholder registry?) associated with a take-private would be an automatic no-go for searcher.
Would love to hear from someone who did this though!
Most of companies of that size that go public do so either because they were unable to raise capital in the private markets (see #3 and #4) or for vanity reasons (see #5).
I would also think the elevated deal costs (and maybe higher risk of closing, depending on shareholder registry?) associated with a take-private would be an automatic no-go for searcher.
Would love to hear from someone who did this though!
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by a searcher
4yrs ago
from London Business School in London, UK
from London Business School in London, UK
Agree it's an interesting idea but haven't spent much time on it due to the difficulties of (assuming a traditional ETA approach) threading the needle between profitable, trading on a VERY low multiple (to enable a significant premium), significant execution risk (incl broken deal costs) and ticking the other boxes we're generally looking for
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