The exit choices of European private firms: A dynamic empirical analysis

Thomas J. Chemmanur, Andrea Signori and Silvio Vismara

Journal of Financial Markets, 2023, vol. 65, issue C

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.

Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finmar:v:65:y:2023:i:c:s1386418123000198

DOI: 10.1016/j.finmar.2023.100821

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