why do firms go public? - Marriott School

Table 2. A Closer Look at Brau and Fawcett (2006a) Motivation Question for IPOs from 2000-2002
Panel A.
How important were/are the following motivations for conducting an IPO Not Important
Very
Important
1 2 3 4 5 Total Reply
a. To minimize our cost of capital 24 35 37 39 32 167
b. Debt is becoming too expensive 66 49 29 17 7 168
c. Our company has run out of private equity 59 32 30 26 20 167
d. To create public shares for use in future acquisitions 11 24 34 60 41 170
e. To allow one or more principals to diversify personal holdings 38 27 30 49 26 170
f. To allow venture capitalists (VCs) to cash-out 68 20 26 30 24 168
g. To enhance the reputation of our company 19 23 44 59 24 169
h. To establish a market price/value for our firm 12 23 48 60 27 170
i. To broaden the base of ownership 31 22 39 53 25 170
j. To attract analysts' attention 35 40 43 39 11 168
Panel B.
How important were/are the following motivations for conducting an IPO Not Important
Very
Important
1 2 3 4 5 Mean
d. To create public shares for use in future acquisitions 6% 14% 20% 35% 24% 3.56
h. To establish a market price/value for our firm 7% 14% 28% 35% 16% 3.39
g. To enhance the reputation of our company 11% 14% 26% 35% 14% 3.27
a. To minimize our cost of capital 14% 21% 22% 23% 19% 3.12
i. To broaden the base of ownership 18% 13% 23% 31% 15% 3.11
e. To allow one or more principals to diversify personal holdings 22% 16% 18% 29% 15% 2.99
j. To attract analysts' attention 21% 24% 26% 23% 7% 2.71
f. To allow venture capitalists (VCs) to cash-out 40% 12% 15% 18% 14% 2.54
c. Our company has run out of private equity 35% 19% 18% 16% 12% 2.50
b. Debt is becoming too expensive 39% 29% 17% 10% 4% 2.11
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