KUHN CAPITAL Saturday, February 24, 2018
Dispatches from the front

Going-Private Equity

Lots of financial advisors and pundits have been speculating recently that the day of private equity investors in going-private transactions is upon us. Their arguments are persuasive and we generally agree with them, but meanwhile the market hasnít been busy converting theory into practice. Why not?

Going private in todayís market would seem to offer the following clear advantages:

But working against the wholesale embrace of going private are several reasons that may explain why these transactions are not yet commonplace:So for the going-private opportunity to flower fully may require two currently missing crucial ingredients -- industries or an economy that demonstrate stable (even rising!) demand, and the emergence of going-private specialty investor groups. For their part, small public companies are already primed to deal.

We expect that large numbers of going-private specialists wonít materialize until after demand has stabilized. But acting now may reward the thoughtful and discriminating going-private investor with the sorts of returns consistent with entrepreneurial risk.

Ryan Kuhn

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