The Take-Private Playbook

The Take-Private Wave

Public-to-private transactions are surging. In 2025, global take-private deal volume exceeded $320 billion — a 45% increase over 2023 levels, according to PitchBook. Private equity firms, flush with over $2.5 trillion in dry powder, are increasingly looking at undervalued public companies as acquisition targets.

The logic is straightforward. Many small and mid-cap public companies trade at significant discounts to their intrinsic value. They bear the full cost of being public — regulatory compliance, quarterly reporting pressure, investor relations overhead — while receiving few of the benefits. Their shares are thinly traded, analyst coverage is sparse, and the public market assigns them a multiple that does not reflect their operational performance.

For the right buyer, these companies represent extraordinary opportunities. Strip away the public-company overhead, apply operational improvements, and you have a platform for value creation that the public market never recognized. Bain & Company's 2025 Global Private Equity Report found that take-private transactions generated a median IRR of 22% over the preceding five-year period — outperforming both traditional buyouts and growth equity investments.

Why Napkin Screens 5,000+ Public Companies

At Napkin, we operate on a simple thesis: the best deals are found, not waited for. While most M&A firms respond to inbound opportunities, our market intelligence team proactively screens the global public equity landscape to identify take-private candidates before the market catches on.

Our screening universe includes over 5,000 publicly traded companies across 38 exchanges and 50+ countries. Every company in this universe is evaluated continuously against our proprietary Take-Private Candidacy Score — a composite metric that weighs 27 distinct factors across five dimensions.

This is not a desktop exercise. It is a systematic, AI-powered process that processes real-time market data, corporate filings, governance disclosures, and sector intelligence. The output is a ranked watchlist of companies that meet the criteria for a viable public-to-private transaction — and a set of actionable insights for buyers seeking liquidity alternatives in the public markets.

The Five Dimensions of the Scoring Model

Our Take-Private Candidacy Score evaluates companies across five core dimensions. Each dimension contributes to a weighted composite score on a 0-to-100 scale. Companies scoring above 70 are flagged for deeper analysis. Companies above 85 are actively presented to our buyer network.

1. Valuation Disconnect

The most fundamental driver of a take-private transaction is a valuation gap between the public market price and the company's intrinsic value. We measure this across multiple vectors:

• EV/EBITDA discount to sector median. Companies trading at a 25%+ discount to their sector's median multiple receive the highest scores.
• Price-to-book below 1.0x. A market cap below book value is a strong signal that the public market is mispricing the asset.
• Free cash flow yield above 10%. High FCF yield relative to market cap indicates that the company generates cash disproportionate to its public valuation.
• Sum-of-the-parts analysis. Companies whose divisions would command higher valuations independently than the current consolidated market cap are prime candidates.

2. Market Cap and Float Analysis

Not every undervalued company is a viable take-private target. The transaction must be executable, which means the market cap and float characteristics must align with buyer capacity.

• Market cap threshold. Our primary screening range is $50M to $2B. Below $50M, the transaction costs relative to deal size become prohibitive. Above $2B, the buyer universe narrows significantly and financing complexity increases.
• Free float percentage. Companies with free float below 50% are more actionable — a concentrated shareholder base simplifies the path to control. Conversely, companies with 90%+ free float and no anchor shareholder present execution risk.
• Average daily trading volume. Thinly traded stocks (ADTV below $500K) are both easier to acquire at a discount and more likely to be undervalued due to liquidity discount.

3. Governance and Shareholder Structure

The governance profile of a target company significantly affects deal feasibility. We evaluate:

• Board composition and independence. Companies with a majority-independent board and no poison pill provisions score higher, as the path to a negotiated transaction is clearer.
• Shareholder activism history. Prior activist involvement — especially campaigns focused on strategic alternatives or capital returns — is a strong positive signal.
• Dual-class structures. Companies with dual-class shares or supervoting rights present structural barriers to take-private transactions and score lower unless the controlling shareholder has indicated willingness to transact.
• Management alignment. CEO and executive equity ownership above 5% suggests management may be amenable to a management buyout or a transaction that includes a management rollover.

4. Sector and Operational Analysis

The sector context matters enormously. A company trading at a discount in a consolidating industry is a very different proposition from one trading at a discount in a declining industry. We assess:

• Sector consolidation trends. Industries with active M&A and platform-building activity — such as healthcare IT, industrial services, and specialty chemicals — generate higher scores because the buyer ecosystem is robust.
• Recurring revenue characteristics. Companies with high-quality recurring revenue (long-term contracts, subscription models, government programs) are more attractive to PE buyers who value cash flow predictability.
• Margin expansion potential. Companies with EBITDA margins below sector median but strong gross margins suggest operational improvement opportunity — the classic PE value creation thesis.
• Capital expenditure intensity. Asset-light businesses with low maintenance capex requirements generate more distributable cash flow, making leveraged structures more viable.

5. PE Interest Signals

The final dimension is the most forward-looking. We track signals that suggest institutional buyer interest is building around a specific company or sector:

• 13F filing analysis. When multiple PE-affiliated funds begin accumulating positions in a public company, it often foreshadows a formal approach. We track quarterly 13F filings across 2,000+ institutional investors.
• Comparable private transaction multiples. When private-market multiples for comparable companies exceed the target's public trading multiple by 30%+, the arbitrage opportunity attracts attention.
• Management commentary. Earnings call language around "strategic alternatives," "unlocking shareholder value," or "exploring options" is coded language that our NLP models detect and flag automatically.
• Advisor mandates. When a public company engages a financial advisor without a stated purpose, it frequently signals a pending review of strategic alternatives, including a take-private transaction.

From Score to Deal

A high Take-Private Candidacy Score is the beginning of the process, not the end. Once a company crosses our threshold, the deal moves from screening to origination — a distinctly human-led phase.

Our market intelligence team produces a detailed candidate brief for each high-scoring company. This brief includes a valuation analysis, a governance assessment, a buyer mapping exercise (identifying the 10 to 20 most likely acquirers), and a preliminary financing structure. The brief is reviewed by our Capital team and, if validated, distributed to relevant buyers in our network.

This is where the creative structuring begins. Take-private transactions are complex by nature. They involve tender offers or merger agreements, regulatory approvals (SEC, antitrust, and often foreign investment review), financing arrangements (typically a mix of equity and leveraged debt), and extensive due diligence. Our role is to connect the right buyer with the right target and facilitate a structure that works for all parties.

Why Public-to-Private Deals Are Surging Now

Several macro factors are converging to create the most favorable environment for take-private transactions in a decade:

• Record PE dry powder. Preqin reports that global PE dry powder reached $2.59 trillion in Q3 2025 — capital that must be deployed or returned to LPs. Take-privates offer scaled deployment opportunities that smaller deals cannot match.
• Public market fragmentation. The number of U.S. public companies has declined from over 8,000 in 1996 to approximately 4,300 today. Many of the remaining small-cap companies receive minimal analyst coverage and trade at liquidity-discounted multiples.
• Regulatory burden. The cost of public-company compliance — Sarbanes-Oxley, proxy solicitation, SEC reporting — has increased by an estimated 60% over the past decade, according to PwC. For small-cap companies, these costs represent a disproportionate share of operating expenses.
• Financing availability. Despite interest rate normalization, the leveraged loan and private credit markets remain liquid and competitive. Direct lenders are actively seeking deployment opportunities, and take-private financings are among the most attractive risk-adjusted credits available.
• Activist pressure. Activist hedge funds increasingly target small and mid-cap public companies that trade below intrinsic value. Even when the activist does not directly pursue a take-private, their campaigns often create the conditions for one — board changes, strategic reviews, and shareholder receptivity to a premium offer.

Goldman Sachs' 2025 M&A Outlook projected that take-private transactions would account for 20% to 25% of all PE deal volume in 2026, up from 14% in 2022. Early data suggests they were right.

The Napkin Advantage in Take-Privates

Most M&A firms encounter take-private opportunities reactively — a client asks about a specific target, or a public company engages them to run a strategic review. Napkin's approach is fundamentally different.

By continuously screening 5,000+ companies and maintaining a scored watchlist, we identify opportunities before the market prices them in. This creates a structural information advantage for our buyer clients. They see targets earlier, with deeper analysis, and with a clearer view of the competitive landscape.

Our AI infrastructure handles the data processing — financial analysis, filing monitoring, sentiment tracking, and comparable transaction mapping. Our human analysts handle the judgment — Is this management team likely to engage? Is this board receptive? Is this the right moment? Is the regulatory path clear?

The combination of systematic screening and human judgment is what makes our take-private practice distinctive. We do not wait for deals to come to us. We find them, validate them, and connect them with the right capital — worldwide, from our bases in Canada and the United States.

For buyers looking to source differentiated deal flow in the public markets, or for public company boards exploring their strategic options, this is the platform. Every deal starts on a napkin. Some of the best ones start on an exchange.