MicroCap Take Private for Search?

by a searcher from Cleveland State University

1 year ago

I think that the Title says it all - Has anybody seen or heard of a searcher doing a MicroCap take private (say EV of roughly $15-50M)  ?

Seems like it could be a great strategy?

What would the pitfalls be?

1 like
110 views
4 comments

searcher from London Business School

Agree it's an interesting idea but haven't spent much time on it due to the difficulties of (assuming a traditional ETA approach) threading the needle between profitable, trading on a VERY low multiple (to enable a significant premium), significant execution risk (incl broken deal costs) and ticking the other boxes we're generally looking for

1 year ago | like reply | 0 likes

searcher from Marquette University

I love the idea, but my gut says the Venn diagram of companies that are (1) public, (2) sub $50MM EV, (3) of sufficient quality that you'd want to buy, (4) financeable at decent LBO terms, and (5) not controlled by a family/mgmt team that would block the acquisition is very, very small.

Most of companies of that size that go public do so either because they were unable to raise capital in the private markets (see #3 and #4) or for vanity reasons (see #5).

I would also think the elevated deal costs (and maybe higher risk of closing, depending on shareholder registry?) associated with a take-private would be an automatic no-go for searcher.

Would love to hear from someone who did this though!

1 year ago | like reply | 0 likes

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