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America's largest private companies

November 16, 2006 09:35 IST

It was a big deal when Ford Motor offered shares to the public in 1956: The second-biggest auto company (and probably the most powerful privately held enterprise of its day) was now a part of Wall Street. Nowadays, US companies crisscross the dividing line between public and private all the time.

Petco Animal Supplies was private prior to its 1994 initial public offering; then it went private in 2000 and public in 2002. Just a few weeks ago, Texas Pacific Group and Leonard Green & Partners took Petco private again in a $1.8 billion deal.

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Among this year's going-private deals were those for Burlington Coat Factory, William Lyon Homes, Goody's Family Clothing and Foodarama. It used to be that leveraged buyout firms narrowly aimed at companies or divisions of companies that needed fixing up, but some of these investment groups now seem willing to accept in-and-out flips unaccompanied by any operational improvements.

What's driving the mad rush to go private? It could be the Sarbanes-Oxley crackdown on public companies or the availability of cheap credit in the junk bond market or the tax shield that comes from replacing equity with debt.

Whatever the impetus, the last 12 months have seen 85 going-private transactions via a private acquirer or investor group, with a combined price tag of $89 billion, according to Thomson Financial.

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Alongside such anciently private outfits as Cargill and Advance Publications, our annual listing of America's Largest Private Companies includes names that would be familiar on Wall Street, like Hertz. Other notable rookies: sporting goods retailer Sports Authority, department store chain ShopKo and Travelport, which owns travel site Orbitz. One company, Michaels Stores (sales of $3.7 billion), went private one day too late and missed our deadline for inclusion on this year's list.

Food and petroleum wholesalers, supermarkets and convenience stores have long populated our Largest Private Companies list, but today the lineup includes a large number of former Wall Street favorites, including Toys "R" Us, Linens'n Things and SunGard Data Systems. Our list also includes stalwarts such as Milliken & Co, a textile and fabrics manufacturer that has been private its entire 141-year history, and ContiGroup Cos, whose roots go back to 1813.

The 394 private companies on this year's list all have at least $1 billion in annual revenue. They have either too few shareholders to be required to file financial statements with the Securities & Exchange Commission or shares whose ownership is restricted to some group, like family members or employees.

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We exclude foreign companies, companies that don't pay income taxes (like Battelle Memorial Institute), mutually owned companies (Northwestern Mutual Group), companies with fewer than 100 employees and companies that are 50 per cent or more owned by foreign or other private companies.

We also leave out companies whose primary business is auto dealerships or real estate investment and/or management. Our revenue figures for each company exclude sales of publicly traded subsidiaries. Data sources include Securities and Exchange Commission and regulatory filings, voluntary disclosure by the companies and estimates based on various sources.

Shlomo Reifman, Forbes