In February 2006, the senior managers discussed the idea of making the firm private. Then later in May 2006, a board meeting was held which formally announced Kinder’sproposal that he wanted to buy more stakes of the company. He appointed the independent team of directors as a special committee to make the important decision that the company should go private or not. He also gave them the authority that they can propose any other alternative except the buyout. In a letter, Kinder offered to acquire all of the outstanding shares of common stocks of KMI withan offer price of $100 per share. In the initial offer letter which was sent by Richard Kinder to the board of directors it was stated that the acquiring amount in total was $22billion which was equally distributed in debt and equity investment by heads of the company and a financial sponsor. The offer price was at 18.5% premium over the KMI share price on 26th may 2016. He further added that he was willing to invest all of his equity ownership making the transition, he was willing to provide complete authority to the independent special committee member to decide if they want to go through the transition or not. In the end he concluded that the merger procedure will not take much time as the managers and other senior members are well aware of the details related to the company.
A firm can be operated by sole proprietorship or by partners.There are further two categories of partnership; General partnership and Limited Partnership. We will first analyze the differences between general partnershipand limited partnership, then we will discuss about the conflicts of interest between limited and general partnership arising after the acquisition. Explanation of both general partnership and limited partnership are given below:
In this type of partnership all the partners can control the business, which means that every partner has the right to take a decision for the company until the agreement is passed to the authority for approval or disapproval of taking actions based on the decision made by an individual or majority of partners.Regarding the debt payment of the business, when it comes to bear the loss in order to pay the company’s due debts the partners are subjected to lose more than their investments and their personal assets will be sold off to pay off the debts as the liabilities of the business are equally shared by the general partners. The downside of this regulation in the partnership clause is that if one partner isn’t able to pay off debtsthen the creditor has the right to collect the debt from the other partner although that partner might have already paid off his liabilities. Hence, when in terms of the liabilities the partnership can be risky in terms of loss for the partners……………….
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