Private Equity Flips Come Up Short, Study Finds

“Flipping” by private equity firms — defined as taking a company public within a year of acquiring it — fails to create long-term value for investors, according to a study cited Wednesday by The Financial Times. These initial public offerings tend to underperform other I.P.O.’s and the market as a whole, according to the study, by Josh Lerner of the Harvard Business School and Jerry Cao of Boston College.
Notably, though, the study also concluded that private-equity-backed I.P.O.’s as a whole tend to fare better than the broader market and more traditional offerings. It is just those taken public in less than 12 months that lag the market.