What is a going private transaction?

A "Going Private" transaction is a corporate transaction in which a publicly-traded company that is listed on the stock exchange de-lists its shares from the stock exchange and hence goes from being a publicly-traded company to a privately-held business. This can be done through the company buying back shares from its shareholders, or through a merger with a newly formed or existing private company. In South Dakota, a company may engage in a Going Private transaction through the South Dakota Business Corporation Act. The Act sets out the rules and procedures under which a corporation can proceed with a Going Private transaction, including having a majority of the voting shares in favor of the transaction, providing sufficient disclosure to the shareholders, and ensuring that the shareholders receive fair value for their shares. Additionally, the South Dakota Business Corporation Act provides that all shareholders must be provided with disclosure of the Going Private transaction prior to the vote to approve the transaction. This helps ensure that shareholders are aware of the risks associated with going private and how it may affect their financial interests. Going Private transactions can be beneficial to companies who no longer want to have their shares listed on the stock exchange and related public scrutiny, or who wish to focus on long-term development instead of short-term shareholders’ interests. However, the process does come with certain risks and shareholders should carefully consider their decision to approve a Going Private transaction.

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What is a going private transaction?

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