Privatization Transaction

Brief Definition

Corporate privatization is when a publicly traded company buys back all of its shares or is acquired by private investors or a private company, making it privately owned and delisting it from the stock exchange.

Further Explanation

Corporate privatization is when a publicly traded company buys back all of its shares or is acquired by private investors or a private company, making it privately owned and delisting it from the stock exchange. This is often done to reduce regulatory burdens, increase operational flexibility, or because existing shareholders believe the company’s long-term value is not fully reflected in its stock price.

Example:
A company named XYZ is publicly traded on the stock market. Private investors or the company’s management believe the company is undervalued and want more operational flexibility. They buy back all the publicly traded shares, making the company private and no longer required to publicly disclose financial information.