Going Public to Acquire? The Acquisition Motive in IPOs

  title={Going Public to Acquire? The Acquisition Motive in IPOs},
  author={U. Çelikyurt and Merih Sevilir and Anil Shivdasani},
  journal={Indiana University Kelley School of Business Research Paper Series},
Newly public firms make acquisitions at a torrid pace. Their large acquisition appetites reflect the concentration of initial public offerings (IPOs) in mergers and acquisitions-(M&A-) intensive industries, but acquisitions by IPO firms also outpace those by mature firms in the same industry. IPO firms' acquisition activity is fueled by the initial capital infusion at the IPO and through the creation of an acquisition currency used to raise capital for both cash- and stock-financed acquisitions… Expand
Acquisition Activities of Initial Public Offerings in Europe: An Analysis of Exit and Growth Strategies
Initial public offerings (IPOs) often engage in mergers and acquisitions (M&As) subsequent to going public which can reflect either exit or growth strategies. We analyze 2,679 entrepreneurial firmsExpand
How an IPO Helps in M&A
An initial public offering (IPO) can often provide a powerful stimulus to private companies seeking to pursue an acquisition-driven growth strategy Based on a comprehensive analysis of U.S. IPOs, theExpand
Merger and Acquisitions of IPO firms in Taiwan
There have been great efforts in the finance literature to enhance the understanding of companies experiencing substantial growth. IPO and mergers and acquisitions (M&As) are very importantExpand
From IPO to M&A: Further Evidence
This study investigates the determinants of mergers and acquisitions (M&A) for firms in the five years following their initial public offerings (IPOs). Specifically, the authors focus on the role ofExpand
Merger-Motivated IPOs
In this paper we explore and find support for IPOs motivated by subsequent acquisition activity. Over a third of newly public firms enter the market for corporate control as acquirers within threeExpand
Effects of R&D Investments and Market Signals on International Acquisitions: Evidence from IPO Firms
We investigate how intangible assets in the form of R&D influence firms’ hazards of engaging in international acquisitions. On the one hand, previous research has noted that the tacit andExpand
Stock-financed M&As of newly listed firms
Newly listed firms are increasingly active in mergers and acquisitions (M&As). The “stock as currency” motivation explains why firms engage in stock-financed acquisitions after their Initial PublicExpand
Corporate Acquisitions, Diversification, and the Firm’s Lifecycle
Lifecycle theories of mergers and diversification predict that firms make acquisitions and diversify when their internal growth opportunities become exhausted. Free cash flow theories make similarExpand
This paper studies the mergers and acquisitions (M&As) activity of initial public offering (IPO) firms on Borsa Istanbul (BIST) that went public between 1990-2014. We find that among the 398 firmsExpand
Institutional Investment in IPOs and Post-IPO M&A Activity
Secondary market stock returns of newly public firms with high levels of institutional investment exceed returns of firms with low institutional investment (Field and Lowry, 2009). We find that aExpand


Why Do Companies Go Public? An Empirical Analysis
This paper empirically analyzes the determinants of an initial public offering (IPO) and the consequences of this decision on a company's investment and financial policy. We compare both the ex anteExpand
Initial Public Offerings: An Analysis of Theory and Practice
We survey 336 chief financial officers (CFOs) to compare practice to theory in the areas of initial public offering (IPO) motivation, timing, underwriter selection, underpricing, signaling, and theExpand
Firm size and the gains from acquisitions
Abstract We examine a sample of 12,023 acquisitions by public firms from 1980 to 2001. The equally weighted abnormal announcement return is 1.1%, but acquiring-firm shareholders lose $25.2 million onExpand
Lending Relationships and Information Rents: Do Banks Exploit Their Information Advantages?
In the process of lending to a firm, a bank acquires proprietary firm-specific information that is unavailable to nonlenders. This asymmetric evolution of information between lenders and prospectiveExpand
A Theory of the Going-Public Decision
We address the question: At what stage in its life should a firm go public rather than undertake its projects using private equity financing? In our model a firm may raise external financing eitherExpand
Insider Ownership and the Decision to Go Public
This paper focuses on the role of an initial public offering (IPO) in maximizing the proceeds an initial owner obtains in selling his company. In deciding whether to undertake an IPO, and whatExpand
Going public and the ownership structure of the firm
Abstract Going public is a complex process with distinct markets for dispersed shares and controlling blocks. It is important to design the sale of new shares with the final ownership structure inExpand
Why Do Firms Become Widely Held? An Analysis of the Dynamics of Corporate Ownership
We consider IPO firms from 1970 to 2001 and examine the evolution of their insider ownership over time to understand better why and how U.S. firms that become widely held do so. In our sample, aExpand
Motivations for Public Equity Offers: An International Perspective
This paper examines the extent to which investment financing and market-timing explanations motivate public equity offers. We consider a sample of 16,958 initial public offerings and 12,373 seasonedExpand
The Variability of IPO Initial Returns
The monthly volatility of IPO initial returns is substantial, fluctuates dramatically over time, and is considerably larger during "hot" IPO markets. Consistent with IPO theory, the volatility ofExpand