Going Private Premiums: What Sellers and Buyers Should Expect in a Take-Private Deal

Hook: Why the premium matters — and why you shouldn’t be surprised if it’s big

If you're a small public company board member, a controlling shareholder, or an acquirer preparing a take-private bid, the core questions are simple and urgent: What premium will get a deal done? Who must sign off? What independent checks will regulators and minority holders demand? What legal steps come after the vote? The recent offer for Titanium Transportation — an all-cash CAD$2.22 per share bid that represented roughly a 41% premium to the prior close — is an ideal case study in how pricing, governance and process collide in take-private transactions today.

The headline: Titanium’s premium in context (what it tells us)

Titanium Transportation’s announced price — about 41% above the immediately preceding close and roughly 42% over the 20‑day volume-weighted average price (VWAP) — is sizable but not unprecedented for small-cap, low‑liquidity issuers where insiders already hold large stakes. For buyers and sellers, the deal crystallizes three lessons:

• Control premiums on small caps can be large: Illiquidity, investor base composition and the presence of strategic buyers or affiliated shareholders typically produce higher transaction premiums than for larger, liquid issuers.
• Related-party dynamics drive governance risk: When an acquirer is an existing significant shareholder (as Trunkeast was for Titanium), boards must be scrupulous about independent processes and disclosure to avoid later challenges.
• All-cash bids shorten the path to acceptance — but heighten scrutiny: Cash removes financing condition uncertainty, making the price the focal point for minority shareholders and regulators evaluating fairness.

2025–2026 trends shaping take-private premiums and process

As of early 2026, several market and regulatory shifts that accelerated in late 2025 affect how premiums are negotiated and reviewed:

• Regulatory focus on related-party take-privates: Securities regulators in Canada and the U.S. increased disclosure expectations for transactions involving insider or affiliated acquirers, requiring more detailed fairness analysis and conflicts disclosure.
• Private capital competition: Elevated dry powder among private equity and family-office buyers means competitive auctions for attractive small caps; that dynamic often pushes premiums higher.
• AI-enabled diligence and valuation tools: Buyers increasingly use advanced analytics to stress-test valuations, enabling quicker, data-driven offers that can be sized to secure a vote.
• Shareholder communication modernization: Regulators and exchanges pushed for clearer, digital-first circulars and virtual meeting options, shortening lead times but raising expectations for accessible disclosure.

Valuation negotiation: How premiums are set (and defended)

Understanding how an offer like Titanium’s is arrived at helps both sellers and buyers negotiate a defensible price. Expect the following valuation inputs in any serious take-private:

• Market-based anchors: recent trading prices, VWAPs (20-, 60-day), and the 52-week range are starting points the market watches. Titanium’s premium referenced both immediate close and VWAP — a standard market anchor.
• Control premium analysis: empirical studies for comparable small-cap transactions, adjusted for liquidity, strategic value, and synergies.
• Intrinsic valuation: discounted cash flow (DCF) scenarios reflecting private-holding assumptions (lower beta, different capital structure, longer-term cost savings).
• Transaction comparables: precedent M&A deals in the sector, adjusted for deal size and structure.
• Strategic and synergy value: buyer-specific upside that can justify above-market bids, often material in deals where the acquirer already has operational overlap.

Practical negotiation strategy for sellers: present three price bands to buyers — minimum acceptable (walk-away), market-comparable, and a stretch price — and insist on a binding exclusivity only after an independent committee reviews a preliminary fairness range.

Practical negotiation strategy for buyers: anchor with the highest defensible market metric but be ready to explain and quantify synergy value. For related-party acquirers, pre-commit to independent fairness procedures to reduce deal risk.

Fairness opinions: Role, selection, and what boards should demand

When a controlling shareholder or affiliate is buying a company (or when the buyer’s identity raises conflict flags), a board’s best defense is a robust fairness opinion from an independent financial advisor.

What a credible fairness opinion must include

• Clear scope and methodologies: DCF, comparable companies, precedent M&A — and explicit weightings or reasons for synergy adjustments.
• Independence disclosures: fee arrangements, previous engagements with the company or its affiliates and measures taken to limit conflicts.
• Range of value (not a single number): an opinion that recognizes valuation sensitivity to key assumptions reduces later attack vectors.
• Robust documentation: work papers and scenario testing that explain how the advisor arrived at the conclusion.

Regulators in late 2025 signaled an expectation that boards relying on fairness opinions ensure advisors perform transaction-specific diligence, not simply a desktop valuation. Boards that skip a fully documented opinion — or use an advisor with material conflicts — invite shareholder litigation and regulatory review.

Board process and shareholder approval: step-by-step playbook

Take-private deals are as much governance processes as financial transactions. Below is a distilled playbook that captures the minimum practical steps, with timing estimates for small public issuers.

1. Preliminary discussions (0–2 weeks): buyer and target management run preliminary price discovery under strict confidentiality agreements; establish an independent committee if conflict risk exists.
2. Term sheet / letter of intent (2–4 weeks): outline price, exclusivity, break fees (if any), and basic conditions. Independent committee engages counsel and starts selecting fairness opinion provider.
3. Due diligence and fairness process (2–6 weeks): advisor performs valuation work; independent committee negotiates purchase agreement terms, disclosure schedules and potential minority protections.
4. Definitive agreement & disclosure (1–3 weeks): sign SPA or arrangement agreement and prepare the shareholder circular/proxy with full disclosure, fairness opinion and management recommendation.
5. Shareholder meeting / vote (4–8 weeks, jurisdiction dependent): mail/e-distribute circular, host virtual or physical meeting; required vote thresholds vary (see below). Votes and any dissent rights are resolved.
6. Closing (1–4 weeks after vote): satisfaction of conditions, payment of consideration, transfer of shares, and filings to delist and terminate reporting obligations.

Voting thresholds and dissent rights — practical notes

• Special resolutions: In most Canadian jurisdictions, a special resolution approving an arrangement typically requires approval by two-thirds (66.67%) of votes cast, but the exact threshold depends on corporate governance documents and the statutory framework. Always confirm the statute and constating documents.
• Short-form mergers (U.S./Delaware): in many U.S. states, a buyer owning a statutory supermajority (often 90%) can effect a short-form merger without a shareholder vote — an efficient squeeze-out tool available to acquirers who already control a large stake.
• Dissentaries/dissent rights: Minority shareholders often retain dissent rights (appraisal) that permit them to seek judicially determined fair value in lieu of accepting deal consideration. The mechanics and remedies differ materially by jurisdiction — consult counsel early.

Minority squeeze-out: legal mechanisms and tactics

Buyers who end up with large majority positions after an initial purchase will often seek to eliminate remaining minority holders. Expect these common paths — but beware the legal and reputational risks:

• Short-form squeeze-out: available where the buyer achieves the jurisdictional statutory ownership threshold (e.g., 90% in many U.S. jurisdictions). It permits merger without a vote by other shareholders.
• Arrangement or court-approved plan: used in Canada and other common-law jurisdictions to restructure ownership and push through a compulsory acquisition; court approval provides finality but requires robust disclosure and fairness evidence.
• Share purchase offers and compulsory acquisition statutes: some jurisdictions permit compulsory acquisition after a successful takeover bid achieving a defined acceptance threshold (commonly 90%).

Defensive considerations for minority holders: challenge related‑party aspects, demand enhanced disclosure, use dissent rights or appraisal remedies, and consider valuation experts to contest fairness.

Post-transaction legal steps: what acquirers and sellers must manage

Closing is not the end — it’s the midpoint for integration, compliance and potential disputes. A checklist of immediate post-closing legal tasks:

• Regulatory and exchange filings: delisting notices, reports to securities regulators, and updates to beneficial ownership filings (e.g., early warning and insider reporting obligations).
• Share transfer and payment mechanics: ensure proper transfer of certificated shares, effective date for dividend and tax purposes, escrow releases and payment to dissenting shareholders where applicable.
• Employment and retention agreements: finalize employment/consulting deals for key executives, confirm change-of-control provisions, and secure IP assignments.
• Tax elections and structuring follow-ups: consider Section 338(h)(10) or similar that may be attractive in cross-border deals; address withholding and reporting on cash consideration.
• Warranties, indemnities and claim procedures: set claim windows, escrow mechanics and dispute resolution forums, and track any post-closing adjustments or working capital true-ups.
• Records and corporate housekeeping: update minute books, reconstitute the board if necessary, and ensure statutory registers reflect the new ownership structure.

Litigation and regulatory risk — how to minimize it

Take-private deals involving insiders or significant shareholders are fertile ground for later claims. Minimize exposure with the following steps:

• Independent committee and counsel: ensure genuine independence, document the committee’s mandate and deliberations.
• Robust fairness process: secure a detailed fairness opinion and retain supporting work papers and materials that demonstrate scenario testing and sensitivity analysis.
• Transparent disclosure: circulars should be plain-language, comprehensive, and accessible; disclose conflicts, valuations, and alternatives considered.
• Escrow and holdbacks: structure representations and warranty escrows to limit post-closing claim leverage and offer remedies to minority holders outside litigation where possible.
• Engage with regulators early: for related-party transactions, engage with regulators early — preclearances or early consultations with securities regulators reduce post-deal enforcement risk.

Practical checklists: documents and questions to have ready

If you’re preparing for a take-private bid or defending one, start by assembling these documents and answers:

For sellers / target companies

• Cap table, insider holdings and beneficial ownership reports
• Recent board minutes, shareholder communications, and material contracts
• Financial statements, forecasts, and working capital analyses
• List of litigation, environmental and compliance exposures
• Employee and union agreements, key person contracts, and IP assignments
• Draft circular/proxy and independent committee charter

For buyers / acquirers

• Preliminary valuation memo and sources of financing
• Confidential information memorandum and management presentations
• Deal model showing post-close capitalization and return scenarios
• Plan for minority squeeze-out (if applicable) and timeline
• Regulatory filing checklist and expected delisting process
• Draft SPA/arrangement agreement and proposed escrow mechanics

Red flags from the Titanium example (and how to avoid them)

Titanium’s deal highlights several risk areas that practitioners should address proactively:

• Perception of self-dealing: affiliation between the buyer and significant shareholders raises immediate questions. Remedy: independent committee, multiple fairness opinions if warranted, and expanded disclosure.
• Illiquidity and price volatility: small caps can have exaggerated VWAP swings; remedy: use multiple market anchors and show sensitivity ranges in the fairness analysis.
• Minority shareholder backlash: even a large cash premium doesn’t eliminate dissent. Remedy: meaningful pre-deal outreach, and consider supplemental pricing mechanisms (e.g., topping-up offers) or enhanced post-close liquidity solutions.

Advanced strategies for buyers and sellers in 2026

Looking forward, sophisticated parties are adopting tactics that materially reduce deal risk and compress timelines:

• Data-room-first valuation testing: use AI-assisted diligence to surface value drivers and deliver near-instant initial valuation ranges to potential bidders.
• Structured earn-outs tied to private targets: where immediate premium is unaffordable, structure partial cash + tied earn-out or retention pools for management to bridge valuation gaps.
• Dual-track auctions with pre-specified fairness benchmarks: invite competing bids but publicize the independent committee’s valuation yardstick to discipline bids and bidders.

“A fairness opinion is a process, not a product.” — Practical maxim for boards considering related‑party take-privates in 2026

Actionable takeaways (what to do next)

• If you’re a board member: constitute an independent committee early, document every step, and insist on a written fairness engagement that includes full work papers.
• If you’re an acquirer: prepare a defensible valuation package with sensitivity analyses, pre-engage an independent financial advisor and counsel, and map likely dissent/appraisal pathways before making an offer.
• If you’re a minority shareholder: evaluate the offer against both market anchors and a reasoned DCF for long-term value; decide early whether to accept, bargain for a higher offer, or pursue dissent remedies.

When to call counsel and what to budget for

Engage experienced M&A counsel at the first sign of a bid or insider negotiation. Budgeting guidance (small public company, illustrative):

• Independent financial advisor/fairness opinion: CAD$75,000–CAD$350,000 (varies by complexity)
• Independent committee counsel and board defense: CAD$50,000–CAD$250,000
• Transaction counsel for buyer and seller: CAD$75,000–CAD$400,000 each
• Escrows/indemnity reserves and potential appraisal litigation: reserve meaningful funds based on likely exposure

These ranges are directional; small-cap deals can economize on some elements, but cutting corners on independent advice or disclosure is a false economy.

Final checklist before you sign or recommend a deal

• Has the board created and empowered an independent committee (documented)?
• Is there a detailed fairness opinion with underlying work papers and sensitivity analysis?
• Are conflicts of interest fully disclosed and mitigated?
• Are voting thresholds and dissent remedies clearly communicated in the circular/proxy?
• Is the financing commitment solid and not contingent on difficult-to-satisfy conditions?
• Are post-closing integration, employment, and tax issues addressed?

Closing thoughts: What Titanium shows us about modern take-privates

Titanium Transportation’s transaction illustrates a recurring 2025–26 pattern: meaningful premiums for small-cap targets combined with elevated regulatory and litigation risk when a buyer is already a significant shareholder. The commercial reality — private buyers are willing to pay multiples above volatile public prices to capture long-term value — collides with governance expectations that demand clarity, independent analysis, and documented process. Parties that respect both sides of that equation close deals faster and with far fewer post-transaction headaches.

Need tailored help?

If you're planning, reviewing or defending a take-private offer — especially one involving related parties — you need counsel who can coordinate valuation advisors, run a defensible fairness process, and anticipate post-closing pitfalls. Contact our M&A team for a confidential intake. We provide a practical deal readiness checklist and an initial fairness-process review tailored to small public companies and strategic acquirers.

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