Table Of Content
What Does It Mean When a Company Goes Private?
When a company goes private, it means its shares are no longer traded on public stock exchanges like the NYSE or NASDAQ.
This usually happens when a group of investors—often the company's management, private equity firms, or a combination—buys out all publicly held shares.
The move to go private can be driven by various reasons, such as wanting to reduce regulatory costs, restructure the business without shareholder pressure, or prepare for a long-term transformation out of public view.
What Happens to Stock When a Company Goes Private?
If you own shares in a company that announces it’s going private, you’ll likely receive a cash payout or stock swap—but the exact outcome depends on how the deal is structured. Here’s what typically happens:
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You Might Receive a Cash Buyout
In most go-private deals, shareholders are offered a specific cash price per share.
As a real-world example, when Twitter was acquired by Elon Musk in 2022 and taken private, shareholders were bought out at $54.20 per share. Public trading ceased, and investors no longer had access to Twitter stock on the open market.
This buyout price is usually at a premium over the market price, but it also means you no longer own any part of the company once the transaction closes.
Company | Year | Buyout Price per Share | Buyout Method |
|---|---|---|---|
Twitter | 2022 | $54.20 | All-cash buyout (Elon Musk) |
Dell | 2013 | $13.75 | Management-led buyout |
Panera Bread | 2017 | $315.00 | Acquisition by JAB |
Hilton Hotels | 2007 | $47.50 | Private equity (Blackstone) |
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Shares Can Be Converted to Private Equity
In some cases, instead of cash, your shares may be converted into shares of the private entity. This is more common with large shareholders or insiders.
However, private shares are much harder to sell because there’s no public market, and they come with less transparency and liquidity.
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You May Be Forced to Sell Your Shares
Once a company delists, minority shareholders are typically required to sell their shares, especially if the new owners want complete control.
You won't have a say in this if the majority of shareholders approve the deal.
What Are Your Options If a Company Goes Private?
When a public company goes private, shareholders typically have limited options depending on the structure of the deal and their investor status.
Accept the Buyout Offer: Most shareholders will receive a cash payout at a fixed price per share. Accepting the offer is usually automatic unless you take steps to object.
Object or Vote Against the Deal: Shareholders may vote on the proposal if it's a merger or acquisition. However, even if you object, the deal can proceed if a majority approves. This means dissenting investors are often still required to sell.
Request an Appraisal: In some states, you may be able to request a legal appraisal if you believe the buyout price is unfair. This option is rare and mainly used by large or institutional investors.
Can a Private Company Ever Go Public Again?
Yes, a company that goes private can later return to the public markets through an initial public offering (IPO). This often happens after a period of restructuring or growth under private ownership.
For example, Dell went public again in 2018, five years after its buyout. Companies may choose to re-enter the public market in order to raise capital or provide liquidity to private investors.
Company | Went Private | Went Public Again | Reason for Return to Public Market |
|---|---|---|---|
Dell | 2013 | 2018 | Restructured under private ownership, needed liquidity |
Hilton Hotels | 2007 | 2013 | Recovered after financial crisis, went public again |
Burger King | 2010 | 2012 | Merged with Tim Hortons, re-entered markets via IPO |
FAQ
In most cases, no. Once a majority of shareholders approve the transaction, you're typically required to sell your shares even if you disagree.
Dividends usually stop once the company is private, unless you retain private shares—which is rare for public investors.
Private companies are not required to disclose financials, so you won’t have the same transparency or access to quarterly reports.
Companies must file disclosures with the SEC, and you may receive proxy statements or tender offers through your brokerage.
Usually no. Private shares are not available on public exchanges and are typically reserved for institutional or accredited investors.
Yes, but they are limited in number and typically include founders, executives, or private equity firms—not public investors.
The process can take a few months depending on regulatory approvals, shareholder voting, and deal structuring.
It often rises after a buyout offer is announced, especially if the offer includes a premium over the current market price.
Yes, competing offers or shareholder pushback can lead to revised terms, including a higher buyout price.
No. Going private is a strategic decision, whereas bankruptcy involves legal insolvency and potential loss of shareholder value.
Employee options may be cashed out, converted into private stock, or modified—depending on the company’s plan and agreements.
