Merger-Motivated IPOs
51 Pages Posted: 15 Jun 2008 Last revised: 19 Sep 2009
There are 2 versions of this paper
Merger-Motivated IPOs
Merger-Motivated IPOs
Date Written: July 28, 2009
Abstract
In this paper we explore and find support for IPOs motivated by subsequent acquisition activity. Over a third of newly public firms enter the market for corporate control as acquirers within three years of the IPO. We find that the role of an IPO in facilitating subsequent acquisitions is twofold. Newly-public firms benefit from the cash funding provided by the IPO, subsequent access to public financing and publicly traded stock, which facilitates stock-based acquisitions. IPO firms also benefit from obtaining public valuations. We find that these firms take advantage of high-post IPO stock values in making stock-based acquisitions at favorable terms and obtain market feedback.
Keywords: IPO, merger, market timing, market feedback
JEL Classification: G32, G34
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
New Evidence and Perspectives on Mergers
By Gregor Andrade, Mark L. Mitchell, ...
-
Do Managerial Objectives Drive Bad Acquisitions?
By Randall Morck, Andrei Shleifer, ...
-
Stock Market Driven Acquisitions
By Andrei Shleifer and Robert W. Vishny
-
Stock Market Driven Acquisitions
By Andrei Shleifer and Robert W. Vishny
-
Poison or Placebo? Evidence on the Deterrent and Wealth Effects of Modern Antitakeover Measures
By Robert Comment and G. William Schwert
-
Does Corporate Performance Improve after Mergers?
By Paul M. Healy, Krishna Palepu, ...
-
Managerial Performance, Tobin's Q, and the Gains from Successful Tender Offers
By Larry H.p. Lang, Ralph A. Walkling, ...