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

Abstract

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

Cao, Jerry, IPO Timing, Buyout Sponsors’ Exit Strategies and Firm Performance of RLBOs (January 19, 2010). Available at SSRN: https://ssrn.com/abstract=1362226 or http://dx.doi.org/10.2139/ssrn.1362226

Jerry Cao (Contact Author)

Independent

No Address Available

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