Company can go from public to private?

[CB]

I was just informed that the company that owns the college I work for (EDMC) has new owners. Aparently, a couple of private firms got together and bought the whole company, changing it from a publically traded one back into a privately traded one. I asked the dean if he meant that these firms had purchased a controlling interest, and he said 'No, they bought the whole company, every share.'

I didn't think it was possible for a company to go from public back to private, but apparently it is. What I want to know is how that works. There were thousands of people who owned shares in EDMC, and I'm sure that there had to be at least one of them who didn't want to sell their shares, so how did these private firms get them... Is there some mechanism or rule in place that actually allows these firms to force all of the shareholders to sell? What if I had held a share? Would it have been taken away from me against my will, so that these two big firms could have it? That doesn't seem fair, and I've never heard of it happening before.

I know that some of you guys are into trading, so tell me: How is it possible for a company to go back to being privately traded after being publically traded for years?

[airbornflght]

The companies must have bought the shares or something, I really have no idea how that would work.

[Leonardo]

It's simple: the prospective buyer offers increasingly high enough prices per share that eventually all shareholders sell. I would imagine this is a much easier proposition and execution with a small firm than with a large one. There probably weren't that many shareholders for the subject firm that owned "EDMC."

Also, you didn't define "public." Public may not necessarily mean publicly traded. The shares could have been held by select partners.

[EDIT] OK, the above was my amateur analysis/guessing. Here are some news links:
http://pittsburgh.bizjournals.com/pittsburgh/stories/2006/05/29/daily30.html
http://biz.yahoo.com/t/30/906.html
http://www.mail-archive.com/club-treasurers@lists.betterinvesting.net/msg12070.html

[CB]

From the way those articles are worded ("Shareholders will recieve $x for their shares"). Doesn't make it sound like the individual shareholders had a choice in whether or not they wanted to sell. What entity gives these firms the power to do that?

[profdlp]

Does this answer your question? :)

http://library.findlaw.com/2002/Nov/1/132397.html

[GHoosdum]

That seems like a complete answer, prof. Good find!

[CB]

So, it's the SEC that gives the athority to force the sales. That's interesting, because it also means that EDMC had fewer than 300 holders at the time of the decision, which means that to an extent, they probabally did just keep offering more money for the shares until everyone sold, and they could only stop the company from 'going private' if there had been more than 300 hold-outs, which seems unlikely.

It still seems unfair to the holder who really wants to keep his share, but I guess it's a conflict between the rights of the holder to keep his property, and the rights of the company to decide who the holders are...