M&A Today: Our Take on Take-Privates

Jeff Jacobs (00:02):

Welcome to Solomon Partners Presents. This is our M&A monthly podcast, where we discuss the latest trends influencing deal activity today.I’m Jeff Jacobs, head of M&A and COO of investment banking at Solomon Partners.

Chris Moynihan (00:16):

And I’m Chris Moynihan, a director in the M&A group. Today we’ll be talking about the return of take-privates. A trend that we’ve seen really gain momentum as public market volatility has shaken investor confidence. So, Jeff, we’ve seen quite a bit of turbulence lately in the public markets. How has that feeding into the resurgence of take-privates?

Jeff Jacobs (00:39):

Well, Chris, it’s definitely having a big impact as of the time of this recording. The day-to-day market volatility, the increasing wariness from public investors…it’s created a tough environment for many companies. Between the choppiness and equity markets, the uncertainty around tariffs and the impact to supply-chain costs. Many companies are struggling to navigate under the public spotlight, and as a result, we’re definitely seeing an uptick in take-private activity. In March alone, there was something like 70 billion in global take-private volume and median monthly volumes for take-private transactions have more than doubled this year, even against the backdrop of overall M&A activity that has been trending down. And I think the logic is pretty clear: when valuations drop and or folks lose confidence in the stability of the market, management teams often feel pressured to hit near-term performance and all of a sudden, going private starts to look like an attractive alternative. It allows for owners… it allows for management teams to tackle some of those operational improvements without the quarter-to-quarter pressure that often comes from public investors.

Chris Moynihan (01:48):

You mentioned the activity in March. Obviously, there’s been a lot of headlines lately about some of the companies going private. Any examples that stand out to you?

Jeff Jacobs (01:56):

Absolutely. The recent take-private of Sketchers by 3G is a great case study. That was a roughly $9.4 billion deal. The stock had fallen from $75 to under $50 before the deal was announced. And certainly, tariff exposure was a factor here, making it difficult for the company to provide financial guidance to the street. Another big one we talked about in a prior conversation was Sycamore taking Walgreens private. Walgreens—if you look back from a hundred-billion-dollar market cap a decade ago to around 10 billion at the time of the deal. Toyota was another one. They have a proposed 42 billion take-private of their car-making supplier, Toyota Industries, partly to simplify its corporate structure. But here again, this was a situation where the stock had dropped pretty significantly in the recent past. These deals all show how volatility can drive companies to explore strategic alternatives, particularly when guidance and valuation pressure make life difficult in the public eye.

Chris Moynihan (02:57):

And those deals got done, but obviously not every deal gets done. What are the types of challenges that you typically see both for buyers and sellers in these types of transactions?

Jeff Jacobs (03:08):

Well, you’re right. These deals aren’t easy. For underperforming companies, buyers worry about catching a falling knife and sellers hate the optics of cashing out near the bottom. We’re also seeing many insiders, particularly control or effective control shareholders, leading these take-privates. These insiders are certainly the most knowledgeable about a business, and typically they have the most confidence and the most conviction to execute a turnaround. Now, they’re obviously conflict dynamics to consider certainly related to 13e-3 transactions and the potential to being subject to the entire fairness standard. Sometimes you need to navigate pushback or potential pushback from minority shareholders who may not understand or may feel like they’re being unfairly treated in a deal. But we’re definitely seeing more examples of these controlled take-private deals. We talked about Sketchers going private. That company had a controlled family ownership structure last year. Squarespace, which was majority controlled by the CEO and early investors, was taken private by Premier. These deals do have complex issues to navigate, and there’s always the need to ensure fair treatment to minority shareholders, but most tend to find a way to the finish line.

Chris Moynihan (04:21):

I think what’s interesting about this trend is not just that we’re seeing some companies that have been public for a while, like a Sketchers go private, but we’re also seeing companies that recently went public a few years ago go private again too.

Jeff Jacobs (04:37):

No, I agree. That’s one of the more fascinating trends playing out: many companies that rush to go public during the 2021 IPO and SPAC boom are now coming full circle. An interesting stat is between April 2024 and April 2025, more than 80 companies that went public in the last five years have been taken private. And that’s up nearly 50% from the volume we saw over an equivalent period 10 years ago. And frankly, if you look at companies with market caps over a billion, some of those slightly larger companies, the trend is even more pronounced. One example is Endeavor. The talent and media company; they went public in 2021 but underperformed as a public company. Silverlake, which had been a long-time investor, took the business private earlier this year.

Chris Moynihan (05:25):

So, with that context, should we expect even more take-privates going forward?

Jeff Jacobs (05:31):

Well, we’re going to have to wait and see. It certainly seems that the stage is set to see more of this market volatility: the impact of tariffs, the declining investor confidence that we’ve seen over the recent period. All these factors weigh in and will tend to foster an environment where these types of deals are more frequently pursued. Now, facts and circumstances are always moving in real time, and if more tariff deals get done and if the market reacts favorably, that certainly could change the narrative.

Chris Moynihan (05:59):

Jeff, as always, I appreciate your insights. Thanks for joining me here today.

Jeff Jacobs (06:05):

Thanks, Chris. And thanks to everyone for tuning into this episode.

Chris Moynihan (06:09):

Be sure to check out solomonpartners.com for more insights, and we’ll be back next month with another M&A update.