The Performance of Roll‐Up Initial Public Offerings

Abstract

Roll‐up initial public offerings (IPOs) create a company to consolidate a number of smaller companies in a fragmented industry. The company that results has limited operational experience and must combine several small and diverse companies. These characteristics may increase the uncertainty of the offer. We find that roll‐up IPOs have higher initial returns than traditional IPOs, implying additional uncertainty. Additionally, roll‐up IPOs do not perform as poorly as other IPOs over the long run. This may be due to benefits from economies of scale and a higher degree of monopoly power.

Citation

Johnston, J. and Madura, J. (2002), "The Performance of Roll‐Up Initial Public Offerings", Studies in Economics and Finance, Vol. 20 No. 1, pp. 1-11. https://doi.org/10.1108/eb028756