The Impact of JOBS Act on M&As
64 Pages Posted: 14 Jan 2020 Last revised: 28 Jul 2020
Date Written: May 31, 2018
Do changes in the IPO regulatory environment affect private firms’ exit choices, bargaining abilities, and valuations? Using the JOBS Act as an exogenous shock to the exit decisions among private firms, we observe that their valuations as M&A targets increase by 36% after the Act, negatively affecting acquirer wealth gains. These results are more prominent for VC-backed targets. We also find that stock (cash) deals decrease (increase) for private firms after the Act. Our results are robust to endogeneity concerns, alternative measures, placebo tests, and other robustness tests.
Keywords: JOBS Act, Bargaining Power, Exit Strategy, Corporate Valuation
JEL Classification: G24, G32, G34
Suggested Citation: Suggested Citation