CEOs and CFOs on IPOs: The Process and Success of Going Public

35 Pages Posted: 1 Mar 2016 Last revised: 16 Nov 2017

See all articles by Martijn J. van den Assem

Martijn J. van den Assem

Vrije Universiteit Amsterdam

Nico van der Sar

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

P.J.P.M. Versijp

Amsterdam Business School; Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Date Written: July 1, 2017

Abstract

We conducted 46 interviews with CEOs and CFOs who were closely involved in an Initial Public Offering (IPO) in the Netherlands. Among other things, we find that pre-existing relationships are a primary consideration in the selection of the lead manager and other syndicate members. Pre-marketing feedback figures prominently throughout the pricing process. The width of the price range of book-built IPOs is especially driven by valuation uncertainty. There is evidence of strategic underpricing in anticipation of subsequent equity issues and because of management’s interest in satisfying new shareholders. Many interviewees believe that the lead manager’s business interests have had a strong influence on the allocation of shares. Managerial perceptions of IPO success are largely driven by how well the firm fared in terms of stock price performance, changes in media attention and visibility, and changes related to the retention and recruitment of staff.

Keywords: initial public offering, survey, going public, IPO process, IPO success, valuation, lead manager, syndicate, pre-marketing, book building

JEL Classification: G30, G32, G34

Suggested Citation

van den Assem, Martijn J. and van der Sar, Nico and Versijp, Philippe, CEOs and CFOs on IPOs: The Process and Success of Going Public (July 1, 2017). De Economist, Vol. 165, No. 4, pp. 381-410, December 2017, Available at SSRN: https://ssrn.com/abstract=2739747 or http://dx.doi.org/10.2139/ssrn.2739747

Martijn J. Van den Assem (Contact Author)

Vrije Universiteit Amsterdam ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands

Nico Van der Sar

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

Philippe Versijp

Amsterdam Business School ( email )

Roetersstraat 18
Amsterdam, 1018 WB
Netherlands

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

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