Management Buy-outs and Venture Capital

Management Buy-outs and Venture Capital

Into the Next Millennium

Edited by Mike Wright and Ken Robbie

This book presents up-to-date evidence on the issues facing financiers and intermediaries involved in venture capital and management buy-outs. It provides a comprehensive review of existing literature and an analysis of international trends in market development as well as a global comparison of the major issues.

Chapter 13: European IPO markets: a post-issue performance study

Benoît Leleux and Daniel Muzyka

Subjects: economics and finance, industrial organisation


Page 280 13.  European IPO markets: a post­issue performance study  Benoît Leleux and Daniel Muzyka European initial public offerings: an introduction Secondary markets in Europe have been thrown into a recession of their own in the late 1980s and early 1990s, with a rapid decline in both the number of new firms  applying for a listing and the total amounts of financing raised. France declined from 53 IPOs in 1987 to less than 11 in 1991. The United Kingdom plummeted from  128 to 36 IPOs over the same period. While cycles in the volume of new introductions have been witnessed in the past, the current decline seems to be more than  cyclical, leading some market authorities to reconsider the very existence of their secondary markets: Britain closed its Unlisted Securities Market to new entrants in late  1994 after having shut down its third market in late 1990, Holland shut its second market in 1993, and other markets, such as Germany, Spain, Italy, Denmark or  Belgium have seen very little if any activity over the last three years.1 Particularly affected are professional investors such as venture capitalists, which have long relied  on public equity markets to realize a significant proportion of their investments.2 Without this harvesting mechanism at their disposal to modulate ownership and  reallocate investments and skills, investors are now forced to reconsider the desirability of some investments in light of the reduced exit opportunities set.  Conventional explanations for the rapid decline of the markets include over­regulation,...

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