CEO-Led Go-Private Proposals: Strategic, Financial, and Governance Implications for Public Company Valuations

In recent years, CEO-led go-private proposals have emerged as a strategic tool for public companies seeking to unlock value, streamline operations, and navigate regulatory complexities. These initiatives, often driven by insider-led consortiums or private equity (PE) firms, reflect a broader shift in corporate governance and capital allocation. However, their impact on valuations and shareholder returns remains a nuanced interplay of strategic intent, financial mechanics, and governance dynamics. This article examines the implications of unsolicited buyout offers through the lens of three key dimensions: strategic repositioning, financial premiums, and governance restructuring.

Strategic Repositioning: Flexibility vs. Public Market Constraints

The decision to take a company private is rarely about short-term gains. Instead, it often stems from a desire to escape the rigidities of public market expectations. For instance, the 2025 acquisition of Innergex Renewable Energy by La Caisse (CDPQ) exemplifies how private ownership can accelerate long-term projects. By removing quarterly reporting pressures, CDPQ could consolidate Innergex's renewable assets into a unified portfolio, leveraging its global capital base to scale operations. Similarly, Colonial Enterprises' $9 billion sale to Brookfield Infrastructure Partners allowed the latter to integrate the Colonial Pipeline into its midstream infrastructure network, streamlining operations under a single governance structure.

For investors, the strategic rationale of such moves is clear: private ownership enables CEOs to prioritize multi-year value creation over quarterly earnings. However, this flexibility comes at a cost. Public companies that go private lose access to broader capital markets and face heightened scrutiny from private equity stakeholders. The key question for shareholders is whether the strategic benefits outweigh these trade-offs.

Financial Premiums: Incentives and Risks

Unsolicited go-private offers often hinge on the promise of a premium to public shareholders. The Forian Inc. case, where CEO Max Wygod proposed a $2.10-per-share buyout (a 19% premium over its August 2025 price), illustrates this dynamic. Such premiums are designed to incentivize shareholder participation, but their validity depends on rigorous due diligence.

Academic research underscores that premiums in go-private deals typically range from 20% to 50%, but these figures often reflect benchmarking rather than intrinsic value. For example, Forian's proposal assumes a low float and limited growth visibility in the public market, which may not align with the company's actual financial health. Founders and executives who accept unsolicited offers without competitive bidding risk undervaluing their assets. A 2025 study by SEG, a software advisory firm, found that 80% of unsolicited offers undergo material revisions during due diligence, often due to discrepancies in cost structures or customer retention metrics.

Investors should scrutinize the assumptions behind these premiums. A 19% offer may seem attractive, but if it's based on flawed financial models or ignores operational inefficiencies, the long-term value for shareholders could be compromised.

Governance Restructuring: Aligning Incentives or Entrenching Control?

Governance changes are a cornerstone of CEO-led privatizations. In PE-backed buyouts, firms often replace incumbent management to reduce agency costs and align incentives. A 2018 study of 163 Japanese PE-backed firms revealed that CEO turnover was more prevalent in family-owned companies, where managerial entrenchment was common. While this turnover improved profitability in family firms, it had mixed effects on agency costs across all PE-backed companies.

The Forian proposal, led by Wygod and his consortium, highlights the dual-edged nature of governance restructuring. By controlling 63% of shares, the consortium can push through the tender offer without public shareholder resistance. However, this concentration of power raises concerns about post-privatization governance. Will the new private structure foster innovation, or will it entrench a narrow set of interests?

For investors, the governance implications of privatization are critical. While private ownership can streamline decision-making, it also reduces transparency. The SEC's disclosure requirements for go-private deals—such as Schedule 13D filings—help mitigate informational asymmetry, but they cannot eliminate all risks. Shareholders must weigh the benefits of a premium against the potential for governance erosion.

Investment Implications and Strategic Considerations

1. Sector-Specific Opportunities: Renewable energy and infrastructure firms, like Innergex and Colonial Enterprises, are prime candidates for privatization due to their capital-intensive nature. Investors should monitor sectors where regulatory or operational complexity outweighs public market advantages.
2. Due Diligence as a Valuation Tool: Unsolicited offers with opaque financial assumptions (e.g., Forian's low-float rationale) require rigorous scrutiny. Investors should assess whether the premium reflects a company's true intrinsic value or merely industry benchmarks.
3. Governance Alignment: Privatization proposals led by insider consortiums (e.g., Wygod's Forian offer) may signal confidence in the company's long-term potential. However, investors should evaluate whether the new governance structure includes safeguards against entrenchment.

Conclusion

CEO-led go-private proposals are neither inherently beneficial nor detrimental to shareholder value. Their success depends on the alignment of strategic vision, financial rigor, and governance discipline. While premiums can offer immediate liquidity, they must be contextualized within the broader operational and governance landscape. For investors, the key is to differentiate between opportunistic buyouts and value-creating transformations. In an era where public market pressures intensify, privatization remains a double-edged sword—one that demands careful analysis and strategic foresight.