Prediction of Ownership and Control Concentration in German and UK Initial Public Offerings.

The paper investigates why the corporate landscapes of Germany and UK are so different in terms of control by analyzing ownership evolution in recent IPOs. We report the control evolution of a sample of size- and industry-matched German and UK companies six years subsequent to the flotation. The initial shareholders in the average German IPO lose majority control six years after going public, whereas the initial owners of UK IPOs decrease their holding to less than the majority two years after going public. Acquisitions are frequent in the UK with 35% of IPOs being taken over versus only one German sample company. Partial take-overs are common in German firms: in one third of the sample a large controlling shareholder acquires control from the existing controlling shareholder. In order to predict the state of ownership and control six years after going public, a multinomial logit model is used.