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The influence of initial sponsor backing on post-IPO acquisition activity

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  • Kaufmann, Mattheo
  • Kolaric, Sascha
  • Walter, Lennart Alexander

Abstract

We investigate the impact of financial sponsor backing [venture capital (VC) or private equity (PE)] on post-initial public offerings (IPO) acquisition strategies of newly public companies. We find that PE-backed newly public firms undertake nearly three times more acquisitions than VC-backed ones and almost twice as many as non-backed firms, indicating that acquisitions are a primary growth strategy for PEs. This result remains robust after addressing potential endogeneity concerns. Additionally, PE syndicate-backed firms engage in transformative acquisitions, proxied by size, while VC-backed firms prioritise organic growth through R&D spending. Moreover, PE-backed acquirers experience significant positive long-run post-IPO stock returns, unlike VC-backed acquirers.

Suggested Citation

  • Kaufmann, Mattheo & Kolaric, Sascha & Walter, Lennart Alexander, 2024. "The influence of initial sponsor backing on post-IPO acquisition activity," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 153071, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    • Handle: RePEc:dar:wpaper:153071
    Note: for complete metadata visit http://tubiblio.ulb.tu-darmstadt.de/153071/
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