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The influence of private equity and venture capital on the post-IPO performance of newly-public acquirers

Author

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  • Matanova, Natalia
  • Steigner, Tanja
  • Sutton, Ninon
  • Thompson, Linh

Abstract

This paper examines the influence of private equity (PE) and venture capital (VC) ownership on the post-initial public offering (IPO) performance of newly-public acquirers. Our results show that acquirers with PE- or VC-backing at the time of the IPO perform better long-term than acquirers without such backing. More importantly, while acquirers without financial backing experience negative long-run returns from first-year acquisitions, acquirers with continued PE- and VC-backing perform significantly better when making acquisitions within the first year after going public. However, acquiring firms and investors should be aware that for mergers in the second and third year post-IPO, continued VC ownership has a detrimental long-term impact. In contrast, higher levels of continued PE ownership tend to have a positive relationship with long-run performance.

Suggested Citation

  • Matanova, Natalia & Steigner, Tanja & Sutton, Ninon & Thompson, Linh, 2022. "The influence of private equity and venture capital on the post-IPO performance of newly-public acquirers," The North American Journal of Economics and Finance, Elsevier, vol. 59(C).
    • Handle: RePEc:eee:ecofin:v:59:y:2022:i:c:s1062940821001972
    DOI: 10.1016/j.najef.2021.101597
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    More about this item

    Keywords

    Private equity; Venture capital; IPO; M&A;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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