You may have heard that Michael Dell, who legendarily founded Dell Computers out of his dorm room at the University of Texas, is now interested in taking the company private again. Dell the company went public in 1988, and after some hard times recently - the stock has declined 43 percent in the past five years - Michael Dell wants to run it himself again.
As soon as he announced the plan to take the company private, Dell's stock rose by 13 percent in one day. That's very common for companies that have announced plans to go private. According to one academic study that looked at such stocks, there was a 26.2 percent premium applied to the pre-takeover stock value of these companies.
And if anything, that number is getting higher. Last year the news service Thomson Reuters calculated that the average premium for takeover companies that were taken private in 2012 approached 30 percent.
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