How does the S&U differ for a public-to-private deal versus a mid-market carve-out?
Public-to-private (P2P) means a sponsor buys all the shares of a listed company and takes it off the market. A mid-market carve-out means a large corporate sells a subsidiary to the sponsor.
The Sources & Uses look similar — equity plus debt funds purchase price plus costs. The differences are in the structuring:
| Aspect | P2P | Carve-out |
|---|---|---|
| Purchase-price mechanic | Tender offer + squeeze-out | Directly negotiated |
| Transaction costs | 5–7% of EV | 2–3% of EV |
| Time to closing | 6–12 months | 3–6 months |
Deep diveShow more details
Why does a P2P cost 5–7% of EV? Securities-regulator filings, tender documentation, takeover statements, and settlement-bank fees add up to 2–4% more than a carve-out. Banks also lever public targets more conservatively, so the equity share in P2Ps tends to be higher.
What does squeeze-out mean? Once the sponsor holds 95% of the shares after the tender offer, it can compulsorily buy out the remaining minority shareholders for cash compensation by court order (most jurisdictions allow this at a 90–95% threshold). If tender acceptance stays below that threshold, appraisal proceedings apply instead — a court review of whether the compensation was 'fair'. That costs an extra 1–2% of the purchase price in legal and expert fees and delays closing by 6–9 months.
Question: "What extra costs does a P2P have versus a carve-out?"
Answer: "Securities-regulator and tender costs, squeeze-out legal and expert fees, and the appraisal-proceedings risk if tender acceptance stays below the squeeze-out threshold. In total, a P2P's Total Uses run 5–10% higher than a comparable carve-out"