Going Private at a Premium: Lessons from Titanium Transportation for Family-Owned Businesses

Hook: You own a family business — a serious take‑private offer lands. What now?

For small and mid‑sized family firms, a take‑private deals can feel like both a golden exit and a minefield. You want the best price, minimal taxes, and protection for minority family members — all while avoiding years of litigation or a tax bill that eats the premium. The 2024–2026 wave of take‑private deals, including Titanium Transportation’s recent all‑cash offer at a 41% premium, holds practical lessons for business owners weighing similar choices.

The Titanium case: why it matters to family businesses

In late 2024 Titanium Transportation Group received an all‑cash take‑private offer of CAD$2.22 per share — roughly a 41% premium to the prior trading close — from an acquisition vehicle aligned with an existing significant shareholder. That structure — related‑party buyer + large premium + a subset of "rolling shareholders" staying invested — is increasingly familiar in the mid‑market. It highlights four immediate considerations for family firms:

• Price vs. process: a high headline premium is attractive, but process controls and minority protections matter.
• Buyer identity: a related‑party buyer (an insider) raises conflict and disclosure issues.
• Deal structure: cash, rollover equity, escrow and holdback terms change tax and estate outcomes.
• Tax profile: capital gains, estate planning, and post‑sale wealth strategies affect how much of the premium you keep.

2026 trends that shape take‑private outcomes

As of early 2026 several market and regulatory trends are shaping buyout dynamics for private and family sellers:

• Robust mid‑market buyer pools: private‑equity and strategic buyers continue to target small and mid‑sized firms, keeping competitive pressure on price.
• Greater scrutiny of related‑party deals: regulators and courts have grown less tolerant of quick related‑party buyouts without independent process (special committees, fairness opinions).
• Financial innovation: earn‑outs, structured payouts, and contingent consideration are common ways to bridge valuation gaps while managing tax timing.
• Tax authorities focused on multijurisdictional gains: cross‑border sellers face closer audit attention on rollovers, use of trusts, and valuation discounts.

What this means for family owners

Higher competition for assets can lift premiums — but the premium headline hides complex tax and governance tradeoffs. Smart sellers decompose the offer into valuation, governance, and tax outcomes, and negotiate each line item separately.

Step‑by‑step checklist: Evaluate any take‑private offer

1. Immediate triage
   • Is the offer all‑cash, cash + rollover, or stock? All‑cash simplifies tax timing; rollovers defer taxable gain but add complexity.
   • Who is the buyer? Related party or third party? Related‑party deals require independent process to reduce challenge risk.
   • Are there conditions (financing, regulatory approvals)? Conditional deals increase execution risk.
2. Valuation sanity check
   • Compare the offer price to 30‑ and 90‑day VWAP, a 1‑year price range, and peers’ multiples. Titanium’s 41% premium vs. the prior close is material — but check longer averages and transaction comps.
   • Obtain a fairness opinion or independent valuation if you represent a minority group or a family interest pool to quantify the premium versus intrinsic value.
3. Governance and shareholder consent mechanics
   • What vote is required? (Special resolution thresholds typically range from 66.67% to 90%, depending on the jurisdiction and whether there’s a compulsory acquisition/squeeze‑out right.)
   • Does the transaction include a "majority‑of‑minority" or special committee approval? If not, push for independent oversight.
   • Check appraisal, dissenters’, and oppression remedies under applicable corporate law (e.g., CBCA, DGCL, or local provincial/state codes).
4. Tax due diligence
   • Compute expected after‑tax cash under plausible tax scenarios (illustrative examples below). Use robust tools — for example, guided modelling or specialist tax‑modelling platforms — to stress test outcomes.
   • Assess whether pre‑transaction restructurings (e.g., estate freezes, QSBC qualification in Canada) can improve tax outcomes without triggering immediate tax events.
5. Deal terms that preserve value
   • Negotiate holdback/escrow periods, indemnities, and break fees to protect sellers from post‑closing clawbacks.
   • Consider earn‑outs if the buyer undervalues future growth; require clear KPIs and independent accounting rules for earn‑out measurement.
6. Post‑closing planning
   • Design a proceeds‑management plan (pay down debt, fund trusts, buy life insurance for estate liquidity).
   • Create a tax and estate plan to preserve wealth across generations (trusts, philanthropic vehicles, structured notes).

Valuation and shareholder premium: what is a 'fair' premium?

Small‑cap take‑private premiums vary, but Titanium’s 41% headline shows buyers sometimes pay substantive control premia. For family firms consider:

• Control premium: buyers pay more to obtain operational control. Typical control premia in mid‑market take‑privates often range 20–50% over recent trading prices, depending on liquidity and strategic value.
• Liquidity premium: public shareholders often accept a sweetened price to convert illiquid shares into cash.
• Blockage and minority discounts: consider whether the bidder expects to pay less to minorities through structured terms — push back with independent valuation evidence.

Practical pricing test

Run these three checks:

1. Multiply the offer price by the number of shares you own to get gross proceeds.
2. Compare to a DCF and a market multiple valuation prepared by a credible adviser.
3. Ask for the buyer’s valuation model or comparable transactions used to justify the premium; independent advisers can probe assumptions.

Shareholder consent, squeeze outs and 'Rolling Shareholders'

The Titanium structure included a set of "Rolling Shareholders" that did not sell and continued as owners post‑transaction. That approach illustrates common structures for family sellers who want liquidity for some members but continuity for others.

• Rolling equity: allows some owners to sell and others to retain a minority or continuing stake — can be tax‑efficient and facilitate continuity.
• Compulsory acquisition thresholds: many jurisdictions permit a buyer to squeeze out remaining shareholders once they own a statutory threshold (commonly 90% in Canada and many provinces; thresholds vary elsewhere). Know the local threshold.
• Minority protections: minorities should insist on valuation protections, independent advice and, where available, appraisal rights.

Tax implications — concrete examples (Canada and the U.S.)

Tax outcomes can cut the headline premium dramatically. Below are simplified illustrative calculations for a single shareholder in each jurisdiction. Always obtain a tax adviser’s model for your facts.

Example A — Canada (typical capital gains treatment)

Assumptions: 10,000 shares, cost base CAD$0.50/share; offer CAD$2.22/share (Titanium example); inclusion rate for capital gains = 50%.

• Gross proceeds = 10,000 × 2.22 = CAD$22,200
• Adjusted cost base = 10,000 × 0.50 = CAD$5,000
• Capital gain = 22,200 − 5,000 = CAD$17,200
• Taxable capital gain (50% inclusion) = CAD$8,600
• Tax payable = 8,600 × marginal tax rate (e.g., 26% federal+provincial blended ≈ CAD$2,236) — approximate; effective tax on the gain ~13% of gain (varies by province and bracket.)

Note: If the shares qualified as Qualified Small Business Corporation (QSBC) shares, a Canadian shareholder might be able to use the Lifetime Capital Gains Exemption (LCGE). Qualification requires meeting active business and holding period tests before the sale (CRA guidance).

Example B — United States (federal + state)

Assumptions: same numeric facts (USD), long‑term capital gain applies at 20% federal + 3.8% NIIT + state 5% = ~28.8% total top rate (simplified).

• Gross proceeds = $22,200
• Cost basis = $5,000
• Gain = $17,200
• Tax ≈ 17,200 × 28.8% ≈ $4,954
• Net proceeds ≈ 22,200 − 4,954 = $17,246

Key point: jurisdiction matters. Work with your advisor to model federal, state/provincial, surtax and timing implications. In the U.S., a sale at death benefits from IRC §1014 step‑up of basis; lifetime sale may forgo that step‑up.

Tax‑smart deal features and pre‑sale techniques

Below are commonly used strategies to reduce tax friction or optimize family succession outcomes; each requires detailed legal and tax planning.

• Pre‑sale QSBC structuring (Canada) — Reorganize active‑business shares to qualify for the LCGE, but be mindful of the holding period and active business tests that typically require 24 months.
• Estate freeze — Senior owners fix their capital gains tax on the next valuation and shift future growth to junior family members; useful for intergenerational planning but can trigger immediate tax if not done properly.
• Rollover and installment sale provisions — Defer tax by taking deferred payments; installment sales in the U.S. spread gain recognition over time (subject to interest/recapture rules).
• Grantor retained annuity trusts (GRATs), spousal trusts, and family limited partnerships — Tools to transfer future appreciation with estate‑tax advantages; complexity and anti‑avoidance scrutiny are ever present.
• Charitable remainder trusts and donor‑advised funds — Provide current tax relief while preserving family philanthropic goals.

When not to sell: the step‑up tradeoff

For U.S. taxpayers facing large unrealized gains, holding until death can produce a basis step‑up under IRC §1014 — effectively eliminating unrealized capital gains tax for heirs on date‑of‑death valuation. That makes immediate sale less attractive if your aims are intergenerational wealth transfer rather than liquidity. In Canada, however, death generally triggers a deemed disposition; therefore the calculus differs.

Negotiation levers: get more than price

In many cases the biggest value comes from negotiating non‑price terms that shape after‑tax proceeds and legacy outcomes:

• Rollover equity — retaining a minority stake can defer tax and maintain family influence. Insist on clear liquidity windows and valuation methods.
• Escrow and indemnity caps — lower the seller’s contingent liability exposure.
• Employment and non‑compete terms — ensure reasonable severance in case key family members are asked to leave.
• Tax gross‑ups — request buyer assistance for anticipated tax liabilities in deals where the structure materially changes tax outcomes.
• Majority‑of‑minority vote — push for this protection if a related party is leading the bid; it requires the approval of a majority of unaffiliated shareholders.

Common legal protections for minority shareholders

Minority family members should ensure the following protections are in the documentation or secured through process:

• Independent special committee empowered to evaluate and negotiate the bid.
• Access to independent valuation and fairness opinions.
• Appraisal/dissenters’ rights and clear remedies for breaches (oppression remedies in Canada and equitable remedies elsewhere).
• Transparent disclosure about conflict‑of‑interest if the bidder is an insider.

Practical post‑sale estate and wealth preservation steps

• Lock in a multi‑tiered plan: pay down debt, establish an emergency liquidity bucket, fund trusts for minors or special needs family members, and then invest the remainder according to a risk tolerance and tax plan.
• Consider life insurance to equalize inheritances if liquidity is used to buy out siblings or cousins.
• Use philanthropic vehicles to achieve tax efficiency and family legacy goals — well‑structured charitable remainder trusts can provide income and a charitable deduction.

Real‑world example — how Titanium’s structure informs family deals

Titanium Transportation’s all‑cash CAD$2.22/share offer (a ~41% premium) shows buyers will pay high premiums for control. But the presence of "Rolling Shareholders" and an existing significant shareholder in the buyer group illustrates the common mid‑market tradeoff: immediate liquidity for some owners and continuity for others.

For a family business, similar structuring lets select family members monetize while others continue operating. That flexibility is powerful — but it demands upfront governance and tax clarity so the winners don’t inadvertently saddle the holdouts (or the estate) with unworkable tax burdens.

Actionable next steps — a one‑page plan you can use now

1. Assemble a short team: independent corporate counsel, a tax advisor with M&A experience, and a valuation firm. If you need coaching on selecting external advisers, see guidance on how to choose a coach.
2. Request full offer materials and a timeline from the buyer.
3. Run the three valuation checks listed above and get a written fairness opinion if you represent a minority interest.
4. Model at least three tax scenarios (immediate sale, rollover + deferred pay, and sale at death) and quantify after‑tax proceeds.
5. Negotiate process protections: special committee, majority‑of‑minority approval, and clear escrow/indemnity terms.
6. Decide who needs liquidity now vs. who will stay invested; document family decisions formally to avoid later disputes. If interpersonal issues might arise, consider professional support — see resources on family and community counselling.

Final thoughts: prioritize process as much as price

Headline premiums like Titanium’s 41% are compelling, but for family‑owned and mid‑market firms the ultimate question is: what do you keep after taxes, fees, and family dynamics? Winning the highest price means little if the deal creates tax surprises, litigation, or broken family relationships.

In 2026, with elevated buyer interest and closer scrutiny of related‑party transactions, the single best protection is a documented, independent process and tax modelling tailored to your jurisdiction and family goals.

Call to action

If your family business just received a take‑private offer, start with a one‑hour diagnostic with our senior M&A tax adviser. We’ll run a quick after‑tax proceeds model, flag immediate legal risks (shareholder vote thresholds, appraisal rights, squeeze‑out rules), and outline a 30‑day action plan to preserve the most value for your family. Contact our team to schedule a consultation and download the free Take‑Private Offer Checklist.

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