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

Sascha Kolaric, Kaufmann Mattheo, Lennart Walter

Research output: Working paper

Abstract

We test whether venture capital (VC) or private equity (PE) backing at the time of a firm's IPO leads to different post-IPO acquisition strategies. We find that PE-backed newly public firms engage in almost three times as many acquisitions as VC-backed newly public firms and almost twice as many as non-backed ones. PE-backed firms are also more likely to engage in diversifying acquisitions as proxied by size, while VC-backed firms tend to increase their R&D spending, indicating a preference for organic growth by VC-backed firms. We additionally document significant positive long-run post-IPO stock returns for PE-backed newly public acquirers, but not for VC-backed ones.
Original languageEnglish
Number of pages62
DOIs
Publication statusUnpublished - 16 Aug 2022

Keywords

  • Initial Public Offerings (IPOs)
  • Mergers and Acquisitions (M&As)
  • Private Equity (PE)
  • Venture Capital (VC)

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