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Taking a company private can be risky

Taking a company private can be risky

by Rick Turoczy on August 22, 2006

In a special election late last month, 98 percent of the shareholders in attendance supported the sale of Outlook Group Corp. to Vista Group Holdings in a deal worth about $47 million. During the special meeting, stockholders cited two main reasons for their stance: the “illiquidity” of the stock and the expensive requirements of the 2002 Sarbanes-Oxley Act. Sarbanes-Oxley, passed by Congress in 2002 in the wake of several corporate scandals, increased government regulations and reporting requirements for public companies.

The process of taking a public company private can be costly. But staying public can be very costly, too, mainly because of the requirements to meet the terms of Sarbanes-Oxley.

“The expense of public company compliance is growing,” said Joe Thornton, a law partner at the Appleton office of Godfrey & Kahn.

“It’s not just a matter of complying with all the regulations,” he said “The regulations create an annual administrative overhead.”

Taking a company private can be risky

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