Understanding Company Repackaging: Impact on Stock Value

Many companies go through the process of repackaging at some point in their history. If you are an investor, you need to understand what repackaging is and what it means to the stock of the company.

Repackaging

Repackaging is a process that involves a private company's purchase of a public company. The private company will typically buy all of the outstanding shares of a public company and then make it a private company for a time. During the repackaging process, the private company will attempt to make improvements to the company it has purchased. After making the necessary changes, the company that made the purchase will utilize an initial public offering to make the other company public again. The goal of repackaging is to try to sell the company for more through the IPO than what was originally invested in the company.

Investment Considerations

As an investor, you do not want to invest in a stock just because the company has been repackaged. You need to do a little bit more research to determine exactly what changes have been made to the company. Find out if the company has actually been improved or if it is still the same company with shiny new packaging.