International Journal of Business, Management and Commerce (IJBMC)

Investors in private companies eventually want to get out of their investments by either selling their stake once the firm goes public or by the private company selling itself. The Wall Street Journal reports several companies that for 2016 weighed a public IPO and a sale at the same time, referred to as a dual track. It is difficult to quantify why a private company would choose a sale over an IPO although The Wall Street Journal reports a larger proportion lately have chosen to sell. One issue investors in private firms face in an IPO is it can take several years to fully sell off their stake in the company. A sale of the firm on the other hand offers a less risky alternative to the stretched out IPO process. We examine investor returns for private companies that have exited their positions through either an IPO or a sale in order to compare which exit strategy gives investors the best return.