Going Public to Acquire? The Acquisition Motive in IPOs
Ugur Celikyurt, Merih Sevilir, Anil Shivdasani
Journal of Financial Economics,
No. 3,
2010
Abstract
Newly public firms make acquisitions at a torrid pace. Their large acquisition appetites reflect the concentration of initial public offerings (IPOs) in mergers and acquisitions-(M&A-) intensive industries, but acquisitions by IPO firms also outpace those by mature firms in the same industry. IPO firms' acquisition activity is fueled by the initial capital infusion at the IPO and through the creation of an acquisition currency used to raise capital for both cash- and stock-financed acquisitions along with debt issuance subsequent to the IPO. IPO firms play a bigger role in the M&A process by participating as acquirers than they do as takeover targets, and acquisitions are as important to their growth as research and development (R&D) and capital expenditures (CAPEX). The pattern of acquisitions following an IPO shapes the evolution of ownership structure of newly public firms.
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Challenges for Future Regional Policy in East Germany. Does East Germany really show Characteristics of Mezzogiorno?
Mirko Titze
A. Kuklinski; E. Malak-Petlicka; P. Zuber (eds), Souther Italy – Eastern Germany – Eastern Poland. The Triple Mezzogiorno? Ministry of Regional Development,
2010
Abstract
Despite extensive government support the gap between East and West Germany has still not been successfully closed nearly 20 years post German unification. Hence, some economists tend to compare East Germany with Mezzogiorno – underdeveloped Southern Italy. East Germany is still subject to sever structural problems in comparison to West Germany: lower per capita income, lower productivity, higher unemployment rates, fewer firm headquarters and fewer innovation activities. There are East German regions with less than desirable rates of development. Nevertheless, the new federal states have shown some evidence of a convergence process. Some regions have developed very positively – they have improved their competitiveness and employment levels. As such, the comparison of East Germany with Mezzogiorno does not seem applicable today.
According to Neoclassical Growth Theory, regional policy is targeted enhancing investment (hereafter the notion ‘investment policy’ is used). has been the most important instrument in forcing the ‘reconstruction of the East’. Overall, the investment policy is seen as having been successful. It is not, however, the only factor influencing regional development – political policy makers noted in the mid 1990s that research and development (R&D) activities and regional concentrated production networks, amongst other factors, may also play a part. The investment policy instrument has therefore been adjusted. Nevertheless, it cannot be excluded that investment policy may fail in particular cases because it contains potentially conflicting targets. A ‘better road’ for future regional policy may lie in the support of regional production and innovation networks – the so-called industrial clusters. These clusters would need to be exactingly identified however to ensure effective and efficient cluster policies.
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How an IPO Helps in M&A
Ugur Celikyurt, Merih Sevilir, Anil Shivdasani
Journal of Applied Corporate Finance,
No. 2,
2010
Abstract
An initial public offering (IPO) can often provide a powerful stimulus to private companies seeking to pursue an acquisition-driven growth strategy. Based on a comprehensive analysis of U.S. IPOs, the authors show that newly public companies are prolific acquirers. Over 30% of companies conducting an IPO make at least one acquisition in their IPO year, and the typical IPO firm makes about four acquisitions during its first five years as a public company. IPOs facilitate M&A not only by providing infusions of capital but also by creating ongoing access to equity and debt markets for cash-financed deals. In addition, IPOs create an acquisition currency that can prove valuable in stock-financed deals when the shares are attractively priced. The authors also argue that IPOs improve the ability of companies to conduct M&A by resolving some of the valuation uncertainty facing privately held companies.
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Change in East German Firm Level Export Determinants
Birgit Schultz
Wirtschaft im Wandel,
No. 3,
2010
Abstract
Exports have a ‘motor of growth’ status for the German economy. They both save and increase employment and provide wealth. However, only a minority of East German manufacturing and construction firms realize sales in foreign countries. The paper analyses for two points in time the influences of firm level export factors on the level of export activities of East German firms, and how the strength of the influence has changed over time. We found export sales especially in firms who are integrated in international corporate groups and are highly specialized. Economies of scale (firm size) increase the export share. Additionally, export sales also depend on wages. These findings are in line with current analysis in the field of international trade. While the above factors are found to be stable over time some others have changed in importance. In 2000 the industrial sector and the unit labor costs were important factors in determining export activities. In 2008 these factors have lost importance. Instead, human capital and investments have achieved significance.
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Unternehmensnetzwerke in der Photovoltaik-Industrie – Starke Verbundenheit und hohe Kooperationsintensität
Christoph Hornych, Matthias Brachert
Wirtschaft im Wandel,
No. 1,
2010
Abstract
The Photovoltaic-(PV)-Industry is a comparatively new industrial sector which is affected by high level of uncertainty. This uncertainty is derived from different technology paths as same as uncertainty about the future market developments. Important instruments to come up with uncertainty are firm networks. Thereby the state of the knowledge about the degree of interconnectedness between the German PV-industry is poor. This article aims to close this gap by giving an overview about the integration of PV-enterprises in firm networks.
The empirical analysis of the network structure of the German PV-industry thereby confirms the expected high level of network relations. Almost nine out of ten firms cooperate with other PV-firms in Germany. Also, the intensity of cooperation turns out to be above the average compared to other industrial sectors. On average one PV-firm cooperates with 5.8 other PV-firms. This indicates possibilities for a better knowledge exchange in the sector. Overall the high cooperation intensity supports the assumption that PV-industry is able to benefit from the spatial concentration of the industry in the region.
Despite the dense network which has already emerged, the promotion of networks can still be an efficient paradigm to support innovativeness and growth in this sector. This is going to be even more successful if the results of the network analysis are integrated into the government supporting scheme.
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Bank Credit Standards, Demand, Pro-cyclicality and the Business Cycle: A Comment
Á. Maddaloni, J. L. Peydró Alcalde, J. Suárez, Reint E. Gropp
Moneda y crédito,
No. 230,
2010
Abstract
We analyze the determinants fo standards and demand for loans to firms and house-holds over the last business cycle using the comprehensive and confidential Bank Lending Survery from the Euro area. There is significant variation of standards and demand over the cycle. Standards for business loans vary more during the business cycle than the lending standards for households, whereas credit demand from households varies more than demand from firms. Lending standards vary mainly due to charges in perception of borrower risk, bank balance sheet positions and competitive pressures. In particular, we find that higher GDP growth softens lending standards for all loans, i. e. lending standards are pro-cyclical. However, we also find pro-cyclicality in credit demand.
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Warum exportiert der Osten so wenig? Eine empirische Analyse der Exportaktivitäten deutscher Bundesländer
Götz Zeddies
AStA - Wirtschafts- und Sozialstatistisches Archiv,
No. 4,
2009
Abstract
In the aftermath of re-unification, East German exports declined around 70% due to the breakdown of COMECON trade. Although since the mid-1990s export growth rates of the New Federal States were higher than those of their West German counterparts, export performance of East German States measured by the share of exports in GDP is still comparatively poor. Whereas for a long time the low export performance of East German producers was ascribed to competitive disadvantages, in the meantime structural deficits on the micro and/or macro level are often considered as the main reason. Using bilateral trade data of German Federal States, the present paper shows on the basis of an orthodox gravity model of trade that East German exports are explicitly lower than predicted by the model. But if the gravity model is augmented by additional variables representing structural differences between Federal States, the latter explain almost entirely the lower export performance of Eastern Germany. Thus, especially the smaller firm sizes and the lower shares of manufacturing industries in gross value added are identified as important explanatory factors of the comparatively weak export performance of the New German States.
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The Standing of the East German Cities within the German System of Cities: An Interim Review on the Basis of Economic Indicators 20 Years after the German Unification
Peter Franz
Wirtschaft im Wandel,
20 Jahre Deutsche Einheit - Teil 1 -
2009
Abstract
The hopes of the East German citizens coupled with the unification in 1990 were not only directed to their personal fortune, but also concerned the amelioration of the living conditions in their cities. Twenty years after this date, we can strike an interim balance how far these hopes have been become true. For this purpose, the thirteen largest East German cities (without Berlin) are compared to cities of similar size in three West German regions (South, North, Center represented by North Rhine/Westphalia). The indicators chosen rely to the cities’ economic and fiscal conditions. The indicators paint a differentiated picture: The average income per capita in the East German cities is still lower than in the West German cities and unemployment rates are still above the West German level. With respect to future growth potential, the East German cities show a relatively good endowment with qualified human capital, with public universities and research institutions. In contrast to that, the small size of the firms and the small number of firm headquarters are unfavourable for a dynamic growth in the future. Another persistent difference between East and West is the low level of public revenues, which keeps the East German cities dependent on Federal grants. The city officials were successful in cutting payroll costs and reducing the number of civil servants. In spite of the diverse depicted economic problems still to be solved, the East German cities over the years have shown impressive endurance in catching-up.
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East German Exports: Remarkable Catch-up, but Still Lagging Behind
Götz Zeddies
Wirtschaft im Wandel,
20 Jahre Deutsche Einheit - Teil 1 -
2009
Abstract
German reunification entailed severe adjustment processes in East German export industries. With political and economic transition in Eastern Europe, at that time the main export market for East German producers, export demand initially collapsed in the early 1990s. Additionally, the introduction of the Deutschmark in Eastern Germany amounted to a massive revaluation, and international competitiveness of East German producers deteriorated. However, manufacturers in the New Federal States opened up new markets, especially in Western Europe and the Americas. As a consequence, after the downturn of construction activity and investment in the mid-1990s, international trade became the driving force of GDP-growth in Eastern Germany. Although since then, goods exports of the New Federal States grew twice as much as those of Western Germany, export ratio (goods exports as a percentage of GDP) only amounts to 22 per cent in Eastern Germany, compared to 42 per cent in the western part of the country. Even in comparison to Eastern European countries in transition, openness to trade of the New Federal States is still comparatively low. As an empirical analysis shows, this must be largely traced back to smaller firm sizes in the New Federal States as well as to the lower importance of manufacturing industries, which are traditionally more export-oriented. Moreover, East German manufacturers largely specialized on intermediate inputs, which are supplied to final assembly lines in Western Germany, but are not recorded as exports. Thereby, East German export performance is considerably underestimated.
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