Post IPO Withdrawal Outcomes

We document capital market activities and corporate outcomes every (588) withdrawn U.S. IPO between 1999 and 2004. Thirteen percent of withdrawn issuers return for a successful IPO, 36 % raise capital privately, 42 % merge or are acquired, and 11 % file for bankruptcy. Aside from cases where issuers successfully return for an IPO, valuations from post-withdrawal events are significantly discounted relative to pre-withdrawal valuations. Rival firms react positively to the withdrawal of competitor IPOs, suggesting that these firms would have been viable threats had their IPOs been completed. Further the paucity of positive post-withdrawal outcomes suggests withdrawal is costly to these potential competitors. Given the superior outcomes of a matched set of IPO issuers that drastically cut offering prices to complete their IPOs, firms considering withdrawal would be well served to instead cut their IPO offering prices