As is the case preceding any merger, managers of companies pursuing two tracks face a possible conflict between pursuing shareholder value and their own career enhancement. Senior level executives — especially finance chiefs — could end up losing their jobs if they choose to sell the company, for instance. A CFO may be part of an integration team for a few months, but usually does not remain with the resulting company in the long-term. "CFOs might favor an IPO in which their worth to the organization goes up because of increased responsibility and investor-relations responsibilities," says Conway.
At the same time, going public is a costly proposition. Still, a parallel track approach can be cheaper than pursuing an IPO or an acquisition at different times, notes Case. If there's a lapse of time between the public offering and the merger, the deal would require a second round of due diligence — and added costs.
The real cost, however, is best gauged in terms of management effort, according to Conway. The time frame of four to six weeks between filing for an IPO and launching the offering leaves little time for managers to ponder bids from suitors.
In any case, the choices they make about whether to consider both tracks and, then, which one to choose are sure to be prompted by the current IPO market and the regulatory climate. "Before the stock-market bubble burst, being CEO was the end goal for many executives," says Kitts. "The bloom has worn off because of the downside of being public."
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