Beyond IPOs: The Cyclical Journey from Private to Public and Back Again

Abstract

The oscillation of firms between private and public domains, encapsulated in the Private-to-Public-to-Private (P2P2P) phenomenon, presents a captivating conundrum in global corporate strategies and financial market dynamics. In a comprehensive examination spanning 2585 international firms, with a concentrated lens on 422 US-based entities, this study meticulously explores the myriad motivations behind such transitions. Initial findings divulge that while substantial initial capitalisations have historically been hallmarks of firm stability, they now frequently pave the way for post-IPO valuation challenges. This shift, coupled with a discernible investor pivot towards operational profitability, often precipitates firms' strategic decisions to re-enter the private realm. Beyond these firm-specific considerations, broader economic indicators, such as the S&P500 Composite Return, act as barometers, gauging the broader financial ecosystem's sway on these transitions. At its core, this research deciphers the intricate interplay between individual corporate behaviours and macroeconomic currents, offering profound insights into the P2P2P phenomenon, with the intent to enlighten stakeholders and influence future policy frameworks in the corporate finance sphere.

Keywords: Private-to-Public-to-Private, P2P2P, Initial Public Offering, IPO, Privatization, Take-Private Transaction

JEL Classification: G32, G34