Abstract:

Private equity firms are often criticized for their short-term view when preparing their portfolio companies for the IPO. We investigate whether private equity-backed IPO firms are riskier than other IPO firms at the IPO and beyond. Our initial results show that they are not riskier than their peers at time of the IPO. However, PE firms often stay longer, as shareholders, after the IPO and we find that PE-backed firms become riskier once the PE shareholders leave. We explore the source of risk by investigating the characteristics of various IPO and PE firms. We identify PE-appointed CEOs and short CEO tenure as associated with increased risk post PE exit.

Please choose your submission type: Full Paper

Primary Track: Financial Management

Keywords: Corporate Finance ;Entrepreneurial Finance

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Prof Armin Schwienbacher