7 ms·

What are the implications of owning shares in a company that is no longer publicly traded? Apologies if this is discussed in the article, it's partially behind

by gundmc 6y ago

What are the implications of owning shares in a company that is no longer publicly traded? Apologies if this is discussed in the article, it's partially behind a paywall.

elcomet 6y ago
Maybe dividends?
tus88 6y ago
Just because something is private does not mean it cannot be owned, in whole or in part.
- function_seven 6y ago
  Ok, but what are the implications of that? If I own 0.001% of a private company—having decided to opt out during this process—am I at the mercy of that company in the future to determine how much they're willing to buy me out for? How hard would it be to locate another 3rd party to buy my share? There's no longer an exchange to trade it on, and there might be all sorts of additional rules about how and who I can sell to. Those are the questions each investor is asking themselves, and I assume that even with the large discount they're being offered, it's probably the better choice unless you hold a significant minority stake.
  - rbrtdrmpc- 6y ago
    I’m pretty sure you can’t do much with those if you are not a major shareholder or you gather under a third company that acts on behalf of you and your (enough) peers
  - rbanffy 6y ago
    The majority shareholder can also invest in the company and dilute your shares if you don't match the investment.
  - tus88 6y ago
    Depends on agreements. Sometimes other owners can veto sale of private shares. But you can sue them to force a sale on reasonable terms to the existing owners in that case. Whether that is worth the hassle for a fraction of a percentage is unlikely.
shoo 6y ago
> partially behind a paywall. if you search for the title from the desktop version of Google it's possible to read the cached version
- boogies 6y ago
  Or just stop allowing JavaScript.
gumby 6y ago
You’ll have no control, will probably find it difficult to sell your shares at any price, and while you’re entitled to any dividends, the controlling entities (Sam wer brothers) can take cash out in different ways and never declare a dividend.
pas 6y ago
The same as with any other (private) company. You have to deal with the majority shareholders and the board/management. It's not like you have any more control if the company happens to be public anyway. Also, big companies, private or not, in most countries have to retain an accounting auditor. Also, if you are a member of the company (as in you have equity) the management has a fiduciary duty toward you. (yes, yes, sure, in practice that means very little, they can siphon off the money in many creative ways), but usually people who are already minority owners have some trust in the majority owners. In some jurisdictions there are rules about what kind of mechanisms are available for the minority shareholders, and usually the get a board seat, and so they can kind of try to audit the majority. And in the end they can still sue, or threaten to sue, or whatever. That usually doesn't help with the valuation, and since the majority has more to lose, they can usually work out some minimally satisfactory deal between themselves. Aaaaand if not, we can finally get the popcorn, because then usually it gets dirty and juicy.
- paxys 6y ago
  Practically speaking the biggest difference is that it is a lot harder to sell the shares to someone else.
  - pas 6y ago
    Yes, indeed, the whole point of being listed is that there's always liquidity (at least a market maker) and so a price signal. And in theory you can set your own risk limits. (Of course if trading is halted for the stock because a sudden drop/jump, that's a different story.) However, investing is always a story about managing risks (so expectations). Public or private, even if it's itself an investment company, it's still just one very fragile basket. And usually there's always someone who has so different risk/expectation profile that they'll take the other end of the transaction. Anyone holding "ETR RKET" has some strange/complex ideas.
jariel 6y ago
Someone should confirm, but 'de listing' is not technically the same thing as 'going private'. 'Not on the exchange' means you don't have to follow exchange rules, but if you meet certain criteria, you're still a 'public company' and therefore subject to the same public disclosure filings etc.. Usually that has something to do with the number of shareholders, in which case, if many do actually 'hold out' it may still be de-facto a public company. Another way of saying: 'you can't just go private because you have 50%'. But it's also Germany/Lux/EU so it's different 'over there'.

by gundmc 6y ago

What are the implications of owning shares in a company that is no longer publicly traded? Apologies if this is discussed in the article, it's partially behind a paywall.

elcomet 6y ago

Maybe dividends?

tus88 6y ago

Just because something is private does not mean it cannot be owned, in whole or in part.

function_seven 6y ago
Ok, but what are the implications of that? If I own 0.001% of a private company—having decided to opt out during this process—am I at the mercy of that company in the future to determine how much they're willing to buy me out for? How hard would it be to locate another 3rd party to buy my share? There's no longer an exchange to trade it on, and there might be all sorts of additional rules about how and who I can sell to. Those are the questions each investor is asking themselves, and I assume that even with the large discount they're being offered, it's probably the better choice unless you hold a significant minority stake.
- rbrtdrmpc- 6y ago
  I’m pretty sure you can’t do much with those if you are not a major shareholder or you gather under a third company that acts on behalf of you and your (enough) peers
- rbanffy 6y ago
  The majority shareholder can also invest in the company and dilute your shares if you don't match the investment.
- tus88 6y ago
  Depends on agreements. Sometimes other owners can veto sale of private shares. But you can sue them to force a sale on reasonable terms to the existing owners in that case. Whether that is worth the hassle for a fraction of a percentage is unlikely.

shoo 6y ago

> partially behind a paywall. if you search for the title from the desktop version of Google it's possible to read the cached version

boogies 6y ago
Or just stop allowing JavaScript.

gumby 6y ago

You’ll have no control, will probably find it difficult to sell your shares at any price, and while you’re entitled to any dividends, the controlling entities (Sam wer brothers) can take cash out in different ways and never declare a dividend.

pas 6y ago

The same as with any other (private) company. You have to deal with the majority shareholders and the board/management. It's not like you have any more control if the company happens to be public anyway. Also, big companies, private or not, in most countries have to retain an accounting auditor. Also, if you are a member of the company (as in you have equity) the management has a fiduciary duty toward you. (yes, yes, sure, in practice that means very little, they can siphon off the money in many creative ways), but usually people who are already minority owners have some trust in the majority owners. In some jurisdictions there are rules about what kind of mechanisms are available for the minority shareholders, and usually the get a board seat, and so they can kind of try to audit the majority. And in the end they can still sue, or threaten to sue, or whatever. That usually doesn't help with the valuation, and since the majority has more to lose, they can usually work out some minimally satisfactory deal between themselves. Aaaaand if not, we can finally get the popcorn, because then usually it gets dirty and juicy.

paxys 6y ago
Practically speaking the biggest difference is that it is a lot harder to sell the shares to someone else.
- pas 6y ago
  Yes, indeed, the whole point of being listed is that there's always liquidity (at least a market maker) and so a price signal. And in theory you can set your own risk limits. (Of course if trading is halted for the stock because a sudden drop/jump, that's a different story.) However, investing is always a story about managing risks (so expectations). Public or private, even if it's itself an investment company, it's still just one very fragile basket. And usually there's always someone who has so different risk/expectation profile that they'll take the other end of the transaction. Anyone holding "ETR RKET" has some strange/complex ideas.

jariel 6y ago

Someone should confirm, but 'de listing' is not technically the same thing as 'going private'. 'Not on the exchange' means you don't have to follow exchange rules, but if you meet certain criteria, you're still a 'public company' and therefore subject to the same public disclosure filings etc.. Usually that has something to do with the number of shareholders, in which case, if many do actually 'hold out' it may still be de-facto a public company. Another way of saying: 'you can't just go private because you have 50%'. But it's also Germany/Lux/EU so it's different 'over there'.