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2016 | 26(4) | 45-62

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A Practical Approach: Value-Maximizing IPO Timing Decision


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Finding the right IPO timing is one of the most crucial decisions shareholders need to take when they want to list their company on a stock exchange. This paper proposes a simple and in practice usable model to help identify a good IPO timing window. From a theoretical point of view, the model identifies capital market inefficiencies (in case there are any) and gives shareholders of the IPO candidate hints how to use them. The key tool used is a multiple-to-multiple base trade-off analysis over time. The analysis identifies relationships between relative valuation levels investors are willing to pay and relative expected change in operating performance metrics. These market-implied valuation-to-operating performance metrics change relationships are applied to the expected operating performance of the IPO candidate over time. This allows approximating a date with the value-maximizing combination of the multiple base and the market implied valuation multiple.



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