The Exit Choices of European Private Firms: A Dynamic Empirical Analysis
76 Pages Posted: 28 Nov 2014 Last revised: 8 Mar 2019
Date Written: March 4, 2019
Using a European private firm sample, we conduct a dynamic empirical analysis of private firm exit choice, previously modeled as a one-time IPO versus acquisition decision. Going public may yield firms a valuation premium (over a direct acquisition) through a post-IPO acquisition, but may also involve possible delisting at a valuation discount. We explicitly account for these dynamic considerations and show that such considerations alter firms’ initial exit trade-off: firms that anticipate a higher post-IPO acquisition probability are more likely to go public initially; those that anticipate a higher post-IPO delisting probability are more likely to choose a direct acquisition.
Keywords: Private firm exits; initial public offerings (IPOs); post-IPO acquisitions; delistings
JEL Classification: G30, G32, G34
Suggested Citation: Suggested Citation