IPO vs M&A in a Private Equity Exit
Hello everyone,
I have read that an IPO exit usually yields higher returns compared to an M&A exit for a private equity firm. Does anyone know the reasoning behind this?
Thanks!
Publicly traded companies = liquidity
Liquidity adds a premium to any company's value.
Public companies are liquid (if they aren't pink sheet trash), therefore they trade for a higher multiple than a privately listed company would and so the exits are usually better.
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