ARE DUAL TRACK IPOS BECOMING MORE COMMON?

Dual Track IPOs

More companies may be pursuing U.S. initial public offerings (IPOs) while simultaneously shopping themselves out for an acquisition, due in part to a sluggish IPO market.

A review by Bloomberg BNA identified at least 14 out of 52 companies (27 percent) that withdrew their U.S. IPO registration statements in 2016 after which they were partially or totally acquired within six months of the withdrawal. This compares to 11 out of 79 companies (14 percent) in 2015. Overall, nearly one-fifth of companies that withdrew their U.S. IPO registration statements since January 2015 have announced a sale within six months of the withdrawal.

The data, derived from Bloomberg Law, suggests that more companies may be pursuing a dual-track process than in the recent past, attorneys told Bloomberg BNA. The dual-track process is more attractive when companies need to raise cash during volatile or flagging markets. It also can provide more flexibility and leverage to negotiate deals and may result in better sale prices.

Read more in my story, Sale or IPO? Some Companies Take the Dual Route.

Bloomberg Law subscribers can access additional data on IPOs in our U.S. Quarterly IPO Market Update.