Greg has only stated and hinted towards something they are calling a consolidation (we all are really unsure if this going to be a straight up consolidation but Sterling I am sure my comments below will make sense to you.)
Consolidation: A contractual and statutory process by which
(1) Two or more corporations jointly become a completely new corporation (the successor corporation),
(2) The original corporations cease to exist and to do business, and
(3) The successor corporation acquires all of the assets and liabilities of the original (now defunct) corporations.
Conceptually, it looks like A + B = C (here, distinct companies A and B consolidate into a new company, C)
The massive problem I see with this Sterling is this situation that we have:
If a single person (or even a small group) owns 100% of the company, he or she can effectively do anything he/she wants: sell off specific assets, divest certain divisions, raise funds via a bank loan, or accept an equity investment for 10% of the company which this current situation presents.
Product Groups: You will rarely work with private companies in DCM or Leveraged Finance unless they are PE-owned and they’re looking to refinance debt. In ECM, you will only encounter private companies in the context of firms about to go public via an IPO. It’s a mixed bag in M&A and you’ll see both public and private companies, but buyers are far more likely to be public.
Leveraged Buy-Out (LBO): The purchase of all publicly- held shares of a takeover target by its management or some other "inside" group, usually through undertaking substantial debt(hence, the "leverage") in order to take the company "private" and avoid a hostile takeover by an outsider. Unfortunately, this usually hurts the company by the huge debt load and possibly poor quality of debt (junk bonds, etc.)
By design, private equity backed privately held businesses are going to be sold. They might be sold to other investors, other companies, or to the public – but they are intended to be sold. These sales can make the senior executives at the companies wealthy and sometimes exceedingly wealthy.
If I were the Rotmans I feel a leveraged Buy-Out would be most conservative and would benefit them much more then an IPO and still this would be considered a consolidation as a buy-out would be happening rather then a merger..
