Easy access to capital, as well as inexpensive leverage, has led to an increase in activity of PE buy-outs of market leaders with strong cash flow. The competition for objects that are for sale has amplified, which has resulted in price increases of the objects. The higher prices offered by the PE companies also affects the number of initial public offerings (IPO) on the Stockholm Stock Exchange. One reason for the small number of current IPOs is that the objects simply have been valued higher by PE companies than they would do in an IPO.
The purpose with this thesis is, from a shareholder’s point of view, to analyze and describe the reasons of making an IPO instead of selling to a PE company.
Contents
1 INTRODUCTION
1.1 BACKGROUND
1.2 PROBLEM
1.3 PURPOSE
1.4 DEFINITIONS
2 METHODOLOGY
2.1 QUALITATIVE APPROACH
2.2 DEDUCTIVE APPROACH
2.3 PRIMARY DATA COLLECTION
2.3.1 Research Sample
2.3.2 Interviews
2.4 VALIDITY, RELIABILITY AND GENERALISATION
3 THEORETICAL FRAMEWORK
3.1 FINANCIAL MARKETS
3.2 IPO
3.2.1 Motives for IPO
3.2.2 Valuation of IPOs
3.2.3 Preparations and Requirements for IPO
3.2.3.1 Before the IPO
3.2.3.2 After the IPO
3.2.4 Performance of IPOs
3.3 BUY-OUT
3.3.1 Motives for Buy-out
3.3.2 Valuation of Buy-outs
3.3.3 Preparations and Requirements for Buy-out
3.3.3.1 Before the Buy-out
3.3.3.2 After the Buy-out
3.3.4 Performance of Buy-outs
3.4 THEORETICAL DISCUSSION
3.4.1 Questions Arising from the Theoretical Discussion
4 EMPIRICAL FINDINGS & ANALYSIS
4.1 WHAT WERE THE MAIN MOTIVES FOR MAKING THE IPO?
4.2 HAVE THE STATUS AND/OR THE PUBLICITY OF THE COMPANY CHANGED SINCE THE IPO?
4.3 DO YOU THINK THAT THE MARKET NORMALLY MAKE ACCURATE VALUATIONS OF PUBLIC
COMPANIES?
4.4 WHAT WERE THE DISADVANTAGES OF MAKING AN IPO?
4.5 ARE THERE ANY DISADVANTAGES OF BEING A PUBLIC COMPANY?
4.6 WERE ALTERNATIVES TO IPO DISCUSSED?
4.7 WOULD THE PREPARATIONS TO SELL TO A PE COMPANY BEEN DIFFERENT THAN MAKING AN
IPO?
4.8 PREMIUM PRICES ARE OFTEN PAID WHEN TAKING A PUBLIC COMPANY PRIVATE (SEE RECENT BID
ON GAMBRO). WOULD NOT THE COMPANY THEN BE VALUED HIGHER PRIVATE THAT PUBLIC?
4.9 CAN THE COMPANY VALUE BE AFFECTED BY WHO THE SHAREHOLDERS ARE?
4.10 HOW DID THE OWNERSHIP FOR THE MANAGEMENT TEAM CHANGE WITH THE IPO?
4.11 HOW WOULD THE MANAGEMENT TEAM VALUE THE SIMPLICITY OF BEING PRIVATE, I.E. BE
SPARED FROM PUBLIC DEMANDS?
4.12 IF THE SHAREHOLDERS FACED THE SAME SITUATION AGAIN, WITH IDENTICAL CONDITIONS,
WOULD THE SAME DECISION BE MADE, I.E. MAKE AN IPO?
5 CONCLUSION AND DISCUSSION
5.1.1 Conclusion
5.1.2 Discussion
5.1.3 Authors reflections
5.1.4 Critique of Chosen Method
5.1.5 Further Research
REFERENCES
APPENDIX
