The Thrift IPO as the First Stage of its Subsequent Sale

Over one‐third of the thrifts that had an initial public offering (IPO) of stock between 1988 and 1992 were acquired within five years of the IPO. We compare the thrifts acquired as public firms to (1) those that go public and remain independent and (2) those that sell themselves privately via merger conversion. Prior to the IPO, publicly acquired thrifts have low risk relative to independent thrifts; a reflection of differing motivations for going public—grooming the firm for sale versus continued growth. Publicly acquired thrifts are over twice the size of privately sold thrifts, suggesting that the costs of going public are a factor in deciding whether to sell the firm privately or publicly.