The Exit Choices of European Private Firms: A Dynamic Empirical Analysis

76 Pages Posted: 28 Nov 2014 Last revised: 8 Mar 2019

See all articles by Thomas J. Chemmanur

Thomas J. Chemmanur

Boston College - Carroll School of Management

Andrea Signori

Catholic University of Milan

Silvio Vismara

University of Bergamo

Date Written: March 4, 2019

Abstract

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

Chemmanur, Thomas J. and Signori, Andrea and Vismara, Silvio, The Exit Choices of European Private Firms: A Dynamic Empirical Analysis (March 4, 2019). Available at SSRN: https://ssrn.com/abstract=2530987 or http://dx.doi.org/10.2139/ssrn.2530987

Thomas J. Chemmanur

Boston College - Carroll School of Management ( email )

Finance Department, 436 Fulton Hall
Carroll School of Management, Boston College
Chestnut Hill, MA 02467-3808
United States
617-552-3980 (Phone)
617-552-0431 (Fax)

HOME PAGE: http://https://www2.bc.edu/thomas-chemmanur/

Andrea Signori (Contact Author)

Catholic University of Milan ( email )

Largo Gemelli, 1
Via Necchi 9
Milan, MI 20123
Italy

Silvio Vismara

University of Bergamo ( email )

Via Marconi 5
24044 Dalmine, Bergamo
Italy
00390352052352 (Phone)
0039035562779 (Fax)

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