How investment bankers manage dual-track exit mandates

Graziano Stefanelli
1 day ago
3 min read

Dual-track exits pursue both IPO and M&A to maximize valuation.

In investment banking, a dual-track process is an exit strategy in which a company simultaneously prepares for an initial public offering (IPO) and a merger or acquisition (M&A). The strategy increases competitive tension between bidders and public investors, allowing sellers—often private equity sponsors or founders—to evaluate the best path to liquidity. Investment bankers coordinate both tracks under strict timelines, balancing confidentiality with market signaling.

Preparation starts with parallel structuring of IPO and M&A readiness.

The banker must begin by preparing two paths at once:

IPO track: Preparing an S-1 filing, selecting underwriters, drafting roadshow materials, and addressing regulatory compliance.
M&A track: Building a confidential information memorandum (CIM), identifying strategic and financial buyers, and managing an auction process or bilateral outreach.

Key deliverables and due diligence materials often overlap, but each track requires unique preparation and legal frameworks. The company’s management team is coached for both public investor presentations and buyer meetings.

Strategic value is created by fostering optionality.

Buyers in the M&A process are aware that the company may go public, creating a valuation floor driven by public market comparables. Simultaneously, IPO investors recognize that if the company receives a compelling acquisition offer, it may exit the public path. This competitive dynamic often enhances pricing, improves deal terms, and shortens timelines.

However, optionality is only credible if both tracks are pursued with full intent—not as a bluff.

Timing is managed to create decision points.

A successful dual-track process requires bankers to orchestrate convergence points:

Milestone	IPO Track	M&A Track
Initial launch	S-1 filing preparation	CIM and buyer list finalization
Market testing	Analyst days and early look meetings	Indications of interest from buyers
Pricing tension point	Investor roadshow	Final bid deadline
Decision window	Evaluate IPO valuation	Compare to final M&A offer

Bankers set deadlines such that bids are received around the time IPO pricing would occur, allowing the board to choose the most favorable outcome.

Disclosure management is critical to avoid signaling risk.

To avoid harming either track, investment bankers help the company manage information flow:

Avoid public disclosure of the M&A track while the IPO is live.
Maintain clean teams or “need-to-know” firewalls between IPO and M&A advisors.
Coordinate messaging to employees, customers, and media to preserve flexibility.

Regulatory disclosure must be carefully coordinated, especially once the IPO is filed or publicly visible.

Deal structure, valuation, and post-close objectives shape the final decision.

The board, supported by its bankers, ultimately weighs several criteria:

Valuation: Headline price vs. net proceeds and long-term equity upside.
Certainty of execution: M&A close speed vs. IPO market volatility.
Strategic control: Full exit via M&A vs. retained stake and future appreciation via IPO.
Governance: Freedom post-sale vs. reporting obligations post-IPO.

For private equity sponsors, the decision often balances IRR maximization with future monetization of any retained ownership.

Dual-track exits are more demanding but often yield superior outcomes.

Running both tracks in parallel increases complexity, fees, and internal resource strain. However, when executed well, a dual-track process:

Enhances negotiating leverage
Creates pricing discipline among bidders
Builds visibility for the asset
Increases optionality without premature commitment

Investment bankers who can expertly manage both paths position their clients to extract full value while minimizing regret risk.

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