Acquisition valuations of withdrawn IPOs: When IPO plans turn into mergers
AbstractWe examine the acquisition valuations of withdrawn-IPOs – private targets that are acquired after they file and then withdraw their IPOs – to examine how IPO registration and withdrawal affect valuations of withdrawn-IPOs in their subsequent mergers. We find that these “almost public” withdrawn-IPOs sell at a significant acquisition premium relative to comparable pure private targets that never file IPO registration and at acquisition valuations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 The premium persists only for withdrawn-IPOs that are acquired before their IPO withdrawals after other factors are controlled for.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confirm that there is a significantly positive (negative) valuation impact of IPO registration (IPO withdrawal) on withdrawn-IPOs’ subsequent acquisitions. The two effects offset each other for withdrawn-IPOs that are acquired after their IPO withdrawals.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 InfoArticle provided by Elsevier in its journal Journal of Banking & Finance.
Volume (Year): 36 (2012)
Issue (Month): 5 ()
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Web page: http://www.elsevier.com/locate/jbf
IPO withdrawals; Acquisition valuations; CARs;
Find related papers by JEL classification:
- G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
- G39 - Financial Economics - - Corporate Finance and Governance - - - Other
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