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Acquisition valuations of withdrawn IPOs: When IPO plans turn into mergers

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  • Lian, Qin
  • Wang, Qiming
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    Abstract

    We examine the acquisition valuations of withdrawn-IPOs – private targets that are acquired after they file and then withdraw their IPOs – to examine how IPO registration and withdrawal affect valuations of withdrawn-IPOs in their subsequent mergers. We find that these “almost public” withdrawn-IPOs sell at a significant acquisition premium relative to comparable pure private targets that never file IPO registration and at acquisition valuations similar to comparable public targets. The premium persists only for withdrawn-IPOs that are acquired before their IPO withdrawals after other factors are controlled for. These findings confirm that there is a significantly positive (negative) valuation impact of IPO registration (IPO withdrawal) on withdrawn-IPOs’ subsequent acquisitions. The two effects offset each other for withdrawn-IPOs that are acquired after their IPO withdrawals.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Banking & Finance.

    Volume (Year): 36 (2012)
    Issue (Month): 5 ()
    Pages: 1424-1436

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    Handle: RePEc:eee:jbfina:v:36:y:2012:i:5:p:1424-1436

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    Web page: http://www.elsevier.com/locate/jbf

    Related research

    Keywords: IPO withdrawals; Acquisition valuations; CARs;

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