Understanding the key differences between a public company take-private transaction and a private company sale is significant given at least 85% of closed take-private deals announced in 2015 or 2016 valued over $100 million resulted in litigation.
By Paul M. Rodel, Esq. & Benjamin R. Pedersen, Esq.
In 2015, private-equity sponsored issuers are estimated to have represented nearly a quarter of all US-issuer IPOs. This article is the result of the authors' analysis of SEC comment letters to PE-backed issuers for IPOs that closed from January 2015 through June 2016 with gross proceeds in excess of $100 million.
Companies considering going public need to understand the immediate costs of going public and the incremental costs of being a public company as both may require substantial internal and external resources.
This paper discusses the August 2015 decision by the Delaware Chancery Court finding that Dole Food, Inc., CEO, David Murdock, and General Counsel, C. Michael Carter, breached their duty of loyalty to Dole and its stockholders and were personally liable to investors for $148 million in damages.
In the past few years, more companies have reported material weaknesses in advance of their IPO. With the timing of this disclosure, companies are alerting investors but also disclosing remediation plans in their initial registration statements.