IPO Timing, Buyout Sponsors’ Exit Strategies and Firm Performance of RLBOs
45 Pages Posted: 24 Mar 2009 Last revised: 12 Nov 2013
Date Written: January 19, 2010
This paper studies the impact of buyout sponsors’ IPO timing on the LBO restructuring process and subsequent exit strategies. I find that LBO duration is negatively related to hot IPO market conditions. Further, following IPOs, RLBOs with shorter LBO duration experience greater deterioration of performance and higher probability of bankruptcy. This suggests that sponsor’s efforts to enhance operating efficiency succumb to market timing. IPO timing does not affect sponsor’s exit strategies and monitoring post IPO. Sponsors keep an active long-run presence with more reputable sponsors more likely to exit by facilitating takeovers.
Keywords: Private Equity, RLBO, Market Timing, LBO Duration, Exiting
JEL Classification: G24, G32
Suggested Citation: Suggested Citation