November 10, 2010

Study: The Value of a “Dual-Track” IPO/M&A Approach

Hat tip to Stikeman Elliott for this: You may want to check out this recent article authored by Jim Brau of Brigham Young University’s Marriott School of Management. Professor Brau and two colleagues analyzed 679 recent take-overs, finding that companies sold off in the course of a dual-track process realized 22-26% premiums over companies acquired without a concurrent IPO. Even more interesting, and somewhat surprising, was the BYU study’s additional finding that this premium significantly exceeded the premium realized when a sale followed within 12 months of a completed IPO. In other words, where a dual-track process is underway, a bid received in response to the initiation of an IPO will on average be superior to a bid received after the IPO has been completed.