Acquisition valuations of withdrawn IPOs: When IPO plans turn into mergers |
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Authors: | Qin Lian Qiming Wang |
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Affiliation: | Department of Economics and Finance, Louisiana Tech. University, Ruston 71272, United States |
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Abstract: | We examine the acquisition valuations of withdrawn-IPOs – private targets that are acquired after they file and then withdraw their IPOs – to examine how IPO registration and withdrawal affect valuations of withdrawn-IPOs in their subsequent mergers. We find that these “almost public” withdrawn-IPOs sell at a significant acquisition premium relative to comparable pure private targets that never file IPO registration and at acquisition valuations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 The premium persists only for withdrawn-IPOs that are acquired before their IPO withdrawals after other factors are controlled for.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confirm that there is a significantly positive (negative) valuation impact of IPO registration (IPO withdrawal) on withdrawn-IPOs’ subsequent acquisitions. The two effects offset each other for withdrawn-IPOs that are acquired after their IPO withdrawals.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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Keywords: | G14 G34 G39 |
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