Dual-track versus single-track sell-outs: An empirical analysis of competing harvest strategies

James C. Brau, Ninon K. Sutton and Nile W. Hatch

Journal of Business Venturing, 2010, vol. 25, issue 4, 389-402

Abstract: We investigate two non-traditional harvest strategies for selling a privately-held company. Dual-track private firms file for an IPO while also courting acquirers. These firms withdraw the IPO to be taken over. Dual-track public firms complete an IPO and are taken over shortly thereafter. Examining 679 takeovers from 1995-2004, we find private dual-track sell-outs earn a 22-26% higher premium and dual-track public sell-outs earn an 18-21% higher premium than single-track sell-outs. Larger, VC-backed, prestigious underwritten, and bubble-year firms have a higher propensity to take the dual-track path. The implication is that entrepreneurs may increase their harvest value by using a dual-track strategy.

Keywords: Entrepreneurial; finance; Harvest; strategy; Dual; track; IPO; Sell-out (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (22)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbvent:v:25:y:2010:i:4:p:389-402

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