Keywords

entrepreneurial finance, harvest strategy, dual track, IPO, sell-out

Abstract

We investigate two non-traditional harvest strategies for selling a privately-held company. Dual-track private firms file for an IPO while also courting acquirers. These firms withdraw the IPO to be taken over. Dual-track public firms complete an IPO and are taken over shortly thereafter. Examining 679 takeovers from 1995–2004, we find private dual-track sell-outs earn a 22–26% higher premium and dual-track public sell-outs earn an 18–21% higher premium than single-track sell-outs. Larger, VC-backed, prestigious underwritten, and bubble-year firms have a higher propensity to take the dual-track path. The implication is that entrepreneurs may increase their harvest value by using a dual-track strategy.

Original Publication Citation

Dual-Track Versus Single-Track Sell-Outs: An Empirical Analysis of Competing Harvest Strategies, with Nile Hatch and Ninon Sutton, Journal of Business Venturing, Vol. 25, 2010, 389-402.

Document Type

Peer-Reviewed Article

Publication Date

2010

Publisher

Journal of Business Venturing

Language

English

College

Marriott School of Business

Department

Finance

University Standing at Time of Publication

Full Professor

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