Overview
During the webinar, Partners Tom Conaghan, Eric Orsic, and Ben Kozinn of McDermott Will & Schulte, alongside Houlihan Lokey’s Michael Bett and Matt Kavney, explored the evolving landscape of public company take-private transactions, highlighting key legal considerations, market dynamics, and insights from Houlihan’s 2025 going private deal study.
Top takeaways included:
- Take-private activity is being driven by a convergence of market dislocation and strategic opportunity. Companies trading below intrinsic value, combined with high compliance costs and limited public market benefits, are increasingly attractive targets for sponsors seeking long-term value creation outside the public spotlight
- M&A markets have rebounded unevenly, with fewer but significantly larger deals. While overall deal count declined in 2025, total deal value rose sharply—up nearly 45%—driven by an increase in mega-deals and supported by strong capital availability, private equity dry powder, and improving macro stability
- Structural dynamics are expanding the take-private opportunity set. A growing pool of underfollowed small- and mid-cap public companies—combined with reduced traditional sponsor-to-sponsor deal flow—has pushed private equity firms to increasingly view public markets as a key sourcing channel
- Valuation dislocations are creating actionable entry points for buyers. Median acquisition premiums exceeded 40% in 2025, reflecting depressed pre-announcement trading prices and a persistent gap between public valuations and sponsor underwriting views of intrinsic value
- Deal execution in take-privates is fundamentally process-driven, not post-closing risk-driven. Unlike private M&A, where risk allocation dominates, public deal documentation focuses on achieving closing certainty, satisfying disclosure and stockholder approval requirements, and managing outcomes if the transaction fails
- Transaction structure and timing remain critical strategic considerations. Although two-step tender offers can close in as little as ~45 days, most sponsors continue to favor one-step mergers to accommodate financing timelines, with overall deal processes typically spanning 9–12 months from initial bid to closing
- Boards and sponsors must carefully balance deal certainty with fiduciary obligations. Tools such as no-shops, go-shops, matching rights, and voting agreements are heavily negotiated to protect value while preserving the board’s ability to respond to superior proposals
- Litigation risk is a near certainty and should be proactively managed. Plaintiffs routinely challenge process, disclosures, conflicts, and deal protections—making early documentation, robust committee processes, and clear disclosure narratives essential to mitigating disruption
- Recent Delaware and SEC developments are reshaping the legal framework. Amendments to Section 144 enhance pathways to business judgment protection in conflicted transactions, while increased SEC scrutiny around Schedule 13D filings is tightening disclosure expectations for activist and would-be acquirers
- Deal structuring and negotiation trends are evolving to bridge valuation gaps. Increased use of go-shop provisions, alternative consideration structures (e.g., CVRs and rollovers), and flexible pricing dynamics reflect a more creative and competitive environment for getting deals across the finish line