Unlocking value in the era of public-to-private transactions

In 2023, global private equity public-to-private deals reached a 16-year high, and according to Preqin, 2024 is likely to witness a continuation of this trend.

In the UK, we expect public companies to face increased interest from private equity buyers, particularly those with underperforming share prices. Rather than viewing this as a threat, companies can proactively embrace the potential involvement from private equity to maximise the long-term value of their business.

Communication becomes pivotal for those companies who wish to position themselves for a take-private transaction. Beyond the dissemination of data, building trust is essential. Potential investors require comprehensive insights into a firm's performance, strategy, and prospects. Establishing trust in leadership encourages investor support for decisions that align with the company's best interests in the context of a takeover bid.

Negotiation emerges as a key component in enhancing shareholder value. Recognising that initial offers may not fully capture the true company value, active negotiation with buyers is essential. This ensures that existing public company shareholders receive the best possible outcome.

Exploring alternative offers further enhances the strategic landscape. Deliberating bids from various potential buyers, in line with the Takeover Code, creates a competitive environment and has the potential to drive up a company's overall value.

In navigating the opportunities presented by potential private equity acquirors, publicly listed firms can benefit from a forward-thinking approach. Through strategic preparation, transparent communication, effective negotiation, and the exploration of alternatives, companies can harness the positive aspects of private equity involvement to increase value for their shareholders.