IPO - Acquisition Puzzle

Abstract

This project explores the propensity of a firm to choose to be acquired by a larger firm against the alternative of going public through an IPO. The project used a number of available secondary data sources in order to test hypotheses regarding factors that may influence the propensity of the firm to be acquired. Qualitative factors would include amount of concentration in industry (does it have few dominant firms), backing from VC/ PE firms, novelty of business offering, scalability of business, accounting practices (conservative/ mark to market) and investor confidence ill management. Quantitative factors include sales, growth rates, valuation, size of the market, and so on. This project would test hypotheses for the effect of each of these factors 011 propensity to go public versus being acquired, while controlling for all other factors.