Before Thorsten Heins took the reigns from Mike Lazaridis and Jim Balsillie, the two RIM co-CEOs apparently discussed with private equity firm Silver Lake Partners last year about going private. However, talks of the matter ended when they couldn’t agree on RIM’s valuation.
According to Bloomberg, there were only “preliminary discussions” but due to the “disagreement over valuation” the talks didn’t go anywhere. If RIM could reach an agreeable valuation, going private could be a good thing.
Investors in private companies may or may not hold a liquid investment. Covenants can specify exit dates, making it challenging to sell the investment, or private investors may easily find a buyer for their portion of the equity stake in the company. Being private frees up management’s time and effort to concentrate on running and growing a business, as there are no SOX regulations to comply with. Thus, the senior leadership team can focus more on improving the business’s competitive positioning in the marketplace. This is essential, as RIM has garnered a bad rap for lack of focus and time-management.
A take-private transaction could be an attractive and viable alternative. As long as debt levels are reasonable and RIM continues to maintain or grow its free cash flow, operating and running a private company frees up management’s time and energy from compliance requirements and short-term earnings management and may provide long-term benefits to the company and its shareholders.
Do you think RIM should go private? Or, do you think they should sell-out and dwindle away from the ‘big 3’ spot? Vote on their sale in our poll here, and comment below on your thoughts about RIM going private.