By Carl Grant, Senior Vice President of Business Development at Cooley LLP
If you are currently selling your company but waiting on the best possible price, a new study provides advice for corporate executives – first, file for an initial public offering (IPO).
While it might sound senseless to implement a dual-track strategy, which means starting the IPO process at the same time as putting your company on the block for sale, it might be worth the hassle if you want top dollar. According to the study, as reported by The Wall Street Journal, companies that are acquired following an IPO receive as much as 26% more than companies who look for a buyer.
For companies that are owned by private equity and venture capital firms, a dual-track approach is a common practice. So, the question is, should companies consider this approach if they are not backed by private equity and VC?
Most M&A experts would agree that companies that have multiple exit options, more bidders and more public information helps to increase the acquisition price. However, according to the study, with a dual-track approach, companies get the top price when an acquisition occurs before an IPO is completed.
If you have ever deployed a dual-track strategy to sell a company, drop us a comment with your insights on the best approach to secure the top selling price.
Disclaimer: The postings on this site are my own and do not represent Cooley LLP’s positions, strategies or opinions.