{"id":13684,"date":"2018-07-20T10:16:14","date_gmt":"2018-07-20T15:16:14","guid":{"rendered":"https:\/\/sfwpartnersllc.com\/?p=13684"},"modified":"2018-07-20T10:16:14","modified_gmt":"2018-07-20T15:16:14","slug":"consider-these-financial-reporting-issues-before-going-private","status":"publish","type":"post","link":"https:\/\/www.sfw.cpa\/news-and-guides\/consider-these-financial-reporting-issues-before-going-private\/","title":{"rendered":"Consider these financial reporting issues before going private"},"content":{"rendered":"<p><img decoding=\"async\" src=\"http:\/\/s3.amazonaws.com\/snd-store\/a\/29686765\/07_13_18_949581190_aab_560x292.jpg\" \/><\/p>\n<p>Issuing stock on the public markets isn\u2019t right for every business. Some public companies decide to delist \u2014 or \u201cgo private\u201d \u2014 often due to the high costs of complying with the requirements of the Securities and Exchange Commission (SEC). But going private can be nearly as complex as going public, so it\u2019s important to dot your i\u2019s and cross your t\u2019s.<\/p>\n<p>SEC requirements<\/p>\n<p>The SEC scrutinizes going-private transactions to ensure that unaffiliated shareholders are treated fairly. A company that\u2019s going private \u2014 together with its controlling shareholders and other affiliates \u2014 must, among other requirements, file detailed disclosures pursuant to SEC Rule 13e-3.<\/p>\n<p>The SEC allows a public company to deregister its equity securities when they\u2019re held by fewer than 300 shareholders of record, or fewer than 500 shareholders of record if the company doesn\u2019t have significant assets. Depending on the facts and circumstances, a company may no longer be required to file periodic reports with the SEC once the number of shareholders of record drops below the above thresholds.<\/p>\n<p>Detailed disclosures<\/p>\n<p>To comply with SEC Rule 13e-3 and Schedule 13E-3, companies executing a going-private transaction must disclose:<\/p>\n<ul>\n<li>The purposes of the transaction, including any alternatives considered and the reasons they were rejected,<\/li>\n<li>The fairness of the transaction, both substantive (price) and procedural, and<\/li>\n<li>Any reports, opinions and appraisals \u201cmaterially related\u201d to the transaction.<\/li>\n<\/ul>\n<p>The SEC\u2019s rules are intended to protect shareholders, and some states even have takeover statutes to provide shareholders with dissenters\u2019 rights. Such a transition results in a limited trading market to be able to sell the stock.<\/p>\n<p>Failure to act with the utmost fairness and transparency can bring harsh consequences. SEC scrutiny can lead to costly damages awards and penalties if your company is guilty of treating minority shareholders unfairly or making misleading disclosures.<\/p>\n<p>Handle with care<\/p>\n<p>Companies that pursue going-private transactions should exercise extreme caution. To withstand SEC scrutiny and avoid lawsuits, it\u2019s critical to structure these transactions in a manner that ensures transparency, procedural fairness and a fair price.<\/p>\n<p>In addition to helping you comply with the SEC rules, we can evaluate whether going private can help your company reduce its compliance costs or allow it to focus on long-term goals rather than satisfying Wall Street\u2019s demand for short-term profits.<\/p>\n<p>\u00a9 2018<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Issuing stock on the public markets isn\u2019t right for every business. Some public companies decide to delist \u2014 or \u201cgo private\u201d \u2014 often due to the high costs of complying with the requirements of the Securities and Exchange Commission (SEC). But going private can be nearly as complex as going public, so it\u2019s important to [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":13683,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-13684","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/13684","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/comments?post=13684"}],"version-history":[{"count":0,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/13684\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/media?parent=13684"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/categories?post=13684"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/tags?post=13684"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}