Is going private the right move for Tesla ? Nobody knows for sure, but we can always look at a few well-known companies that did it in the past...
One of the most well-known delisting is certainly Dell
, who decided to go private in 2013 in a $24.4 billion transaction. However, things didn't go as well as expected: while the company increased revenue growth, it is still losing money. In particular, Dell suffered from the shift from laptops to tablets and other mobile devices. In July, the PC maker announced that it is planning to go public again.
3G Capital took Burger King
private, constructing an IPO with Pershing Square Capital lead by Bill Ackman. But, in 2012, the company went public again.Heinz
, the world-leader of the packaged food industry, was delisted from NYSE in June 2013. It was acquired for more than $28 billion by an investment consortium comprising of Berkshire Hathaway. In 2015,
Kraft Foods Group announced a merger deal with H.J. Heinz financed in part by Warren Buffett, which took the company back to the stock market.Hilton
, the leading global hospitality and hotel chain, was bought by Blackstone Group in 2007 for $26 billion, and was eventually delisted from the NYSE. It allowed the compay to renegotiate its debt, and expand internationally. However, the company went public again in 2013.
As you can see in these examples, they all eventually came back. Yes, privatization offers many benefits : it is freeing up management's time and effort to concentrate on running and growing a business as there is much fewer regulation to comply with, and no quarterly earnings or short sellers to deal with. But it can also mean being under strong pressure from the new private owners, who might set tough targets and tight deadlines.
However, it might be the right move right now for a company like Tesla, which is taking a long view and is driven by the idea to shape the future of mobility. "As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla," Elon Musk wrote in a memo to Tesla employees. "Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term."
And who knows, it may come back to the market in an even better shape in a few years time ...