“Taking companies private to pivot the strategy direction or the business model is much easier without the pressure of shareholders and regulatory bodies,” Claudia Fan Munce, a director of Arteris, Best Buy Co., and Bank of the West, who served on the board of CoreLogic until it was taken private last year, said. She also has experience investing and in venture capital. “[They can] come back out public again after the company reestablishes itself in the new direction.”

According to Fan Munce, however, it is rare that a company would consider going private without reacting to external pressure. Usually, the board would consider this option in reaction to shareholder challenges or proxy fights.

Many going private transactions involve significant amounts of debt. In these situations, the assets of the acquired company are used as collateral for the loans, and its cashflows are used to pay for debt servicing.