IPO Timing, Buyout Sponsors’ Exit Strategies and Firm Performance of RLBOs

• Main Author: CAO, Jerry Xiaping
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2011
• Subjects: Portfolio and Security Analysis
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/4578; https://ink.library.smu.edu.sg/context/lkcsb_research/article/5577/viewcontent/IPO_Timing_Buyout_Sponsors__Exit_Strategies_and_Firm_Performance.pdf
• Institution: Singapore Management University

This paper studies the impact of buyout sponsors’ IPO timing on the LBO restructuring process and subsequent exit strategies. I find that LBO duration is negatively related to hot IPO market conditions. Further, following IPOs, RLBOs with shorter LBO duration experience greater deterioration of performance and higher probability of bankruptcy. This suggests that sponsor’s efforts to enhance operating efficiency succumb to market timing. IPO timing does not affect sponsor’s exit strategies and monitoring post IPO. Sponsors keep an active long-run presence with more reputable sponsors more likely to exit by facilitating takeovers.