The Real Exit: Selling Strategies Subsequent to Private Equity Backed IPOs

29 Pages Posted: 4 Mar 2013

Date Written: March 4, 2013

Abstract

This study examines the exit strategy of private equity investors after they take their portfolio companies public. Recent empirical studies considering private equity exit channel and timing generally fail to expose the investor's strategy after the IPO. For this purpose I use a comprehensive set of PE backed IPOs from 1996 to 2005 in the United States and subsequently track governance characteristics until investors exit their controlling stakes. I find strong evidence that PE investors strategically choose whether to sell their position en bloc in a trade sale or gradually to dispersed shareholders on the secondary market. Severe governance differences between the two groups of exit strategies at IPO and evolving from IPO to exit suggest that PE investors anticipate and actively plan an eventual trade sale well in advance.

Keywords: private equity, initial public offering, ownership structure, corporate governance, exit

JEL Classification: G23, G32, G34

Suggested Citation

Visnjic, Nikolai, The Real Exit: Selling Strategies Subsequent to Private Equity Backed IPOs (March 4, 2013). Available at SSRN: https://ssrn.com/abstract=2227994 or http://dx.doi.org/10.2139/ssrn.2227994

Nikolai Visnjic (Contact Author)

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

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