The Interplay of IPO and M&A Markets

Author:

Aktas Nihat,Andres Christian,Ozdakak Ali

Abstract

This chapter examines the interactions of initial public offerings (IPOs) and mergers and acquisitions (M&As), in contrast with the common approach of studying them in isolation. Of the many motivations to conduct an IPO (e.g., fundraising, access to capital, increased liquidity, publicity), several of them clearly relate to takeover activities. This chapter analyzes three key forms of interaction: (1) IPO and M&A markets interact when entrepreneurs and early investors from private firms decide to liquidate and cash out their investments. They can exit through an IPO, or they might seek an acquisition by another firm (e.g., sellout to a strategic acquirer, private equity fund, or another financial investor); (2) after a being listed, some firms become takeover targets, and some IPO firms also participate actively in the M&A market as acquirers; (3) between the IPO and M&A markets, one can be used to exert pressure on the other.

Publisher

Oxford University Press

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1. Evidence of the Italian special purpose acquisition company;Corporate Ownership and Control;2019

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