Long goodbyes: how do private equity funds manage sell-downs after initial public offerings?

Journal article

We analyze how private equity funds (GPs) sell down their stakes in companies they take public. GPs earn private equity management fees and carried interest on public equity holdings. The average duration of post-IPO holdings is 3 years, whereas lockups expire after 6 months. PE-backed IPOs perform well during the lockup, but we find no evidence that GPs add value for investors through the timing of their aftermarket selldown strategies. GPs appear reluctant to sell losers, consistent with behavioral biases and agency effects. Long goodbyes are more likely when the fund is performing better, resulting in higher payments to GPs.

Authors: Jenkinson, T; Jones, H; Rauch, C

• Publication status: Published
• Peer review status: Peer reviewed
• Publisher: Institute for Operations Research and Management Sciences
• Journal: Management Science
• Volume: 72
• Issue: 6
• Pages: 5315-5336
• Publication date: 2025-09-30
• Acceptance date: 2025-03-17
• DOI: 10.1287/mnsc.2022.02043
• EISSN: 1526-5501
• ISSN: 0025-1909
• Language: English
• Keywords: private equity; initial public offerings