TY - JOUR
T1 - Private equity exits after IPOs
AU - Dong, Qi
AU - Slovin, Myron B.
AU - Sushka, Marie E.
N1 - Funding Information:
The authors thank two anonymous referees for insightful comments and suggestions that improved the paper, and thank Douglas Cumming, the editor, for valuable guidance and useful observations. Qi Dong acknowledges financial support from King Fahd University of Petroleum and Minerals through a research startup grant.
Publisher Copyright:
© 2020 Elsevier B.V.
PY - 2020/10
Y1 - 2020/10
N2 - 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.
AB - 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.
KW - Private equity
KW - Secondary offerings
KW - Third party takeovers
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U2 - 10.1016/j.jcorpfin.2020.101696
DO - 10.1016/j.jcorpfin.2020.101696
M3 - Article
AN - SCOPUS:85088832205
SN - 0929-1199
VL - 64
JO - Journal of Corporate Finance
JF - Journal of Corporate Finance
M1 - 101696
ER -