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Chapter 14. Mergers and Acquisitions (M&... > Sales and Mergers Versus IPOs

Sales and Mergers Versus IPOs

A company facing a merger or a sale is often confronted with the dilemma of choosing between selling the company at an early stage or continuing the development efforts in order to take the company public. Within these considerations, the interests of the investors, who regard sales and IPOs as alternative exits, are also important.

IPOs

An IPO entails important advantages for young companies, such as the creation of a readily-available source of capital for the company; an efficient means of promoting awareness of its existence and products; credibility among potential partners, customers, and investors; liquidity for investors; the possibility for investors and entrepreneurs to continue holding the company's shares after the IPO (as opposed to a sale, in which normally the company is effectively eliminated); and maintaining their independence in management (see the section on the advantages of going public for a more detailed discussion on the subject).


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