Private equity exits after IPOs

Qi Dong, Myron B. Slovin, Marie E. Sushka

Research output: Contribution to journalArticle

Abstract

We examine post-IPO exits of private equity sponsors of portfolio firms via follow-on secondary equity offerings and third party takeovers. Sponsors retain considerable ownership in listed portfolio firms for lengthy periods after IPOs, well beyond lockup expiration. After private equity post-IPO secondary offerings, corporate profitability is strongly superior to benchmark firms, indicating portfolio firms are successfully prepared for private equity's subsequent exit. Nevertheless, share prices fall at offering announcements, reflecting the failure of private equity sponsors to exit stakes in listed entities at the high premiums paid in third party takeovers, premiums that are invariably shared equally with public shareholders.

Original languageEnglish (US)
Article number101696
JournalJournal of Corporate Finance
Volume64
DOIs
StatePublished - Oct 2020

Keywords

  • Private equity
  • Secondary offerings
  • Third party takeovers

ASJC Scopus subject areas

  • Business and International Management
  • Finance
  • Economics and Econometrics
  • Strategy and Management

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