Initial public offerings are an expensive exit route for company owners. Underwriters in the U.S. typically charge 5% to 7% of proceeds. Underpricing of shares takes another 10% to 15%, on average; total costs of $100 million aren’t unusual for large deals. It’s not surprising that many owners pursue other options, especially M&A.
A version of this article appeared in the November 2013 issue of Harvard Business Review.