What if it's the insiders who loaned out their shares for shorting at a 40% interest rate? Great return for them. Couple that with some insider selling and now the stock price is very depressed. Ok, now they have positioned themselves to be purchased by private equity on the cheap. The insiders have no problem selling their shares at below the IPO price as they are more than likely gonna have a larger ownership % of the private company going forward. And if they believe in the long term value of Skul, they will personally get a much larger return through their cheap ownership of the new company versus their stake in the public company.
They've already received their interest income from the short borrowing. And I'm sure any sort of change in control triggers all their stock compensation, so they get their money. And they care much less about the price of the sale as they get their money, get ownership of the private company and still get to work for the company under much less public scrutiny. They have absolutely no need to be a public company at this point. They got paid on the IPO and got enough extra cash to grow their business.... not debt today. Why deal with all the headaches if they can do their business privately and be more profitable?
So if they sold the company for $10 a share, who's gonna vote against it? Insiders have alot of shares and others who bought below that price would have no problem. Sounds pretty good at today's share price, but as a long term investor I would be very upset. We get screwed and miss the opportunity to profit on future growth and earnings. Probably most people who bought above $10 already sold, so most investors would welcome a $10 sale.
What a great strategy if you're the insider...and why couldn't it happen?