The initial public offering (IPO) is typically not an end goal for entrepreneurial firms. Instead, newly public firms often face a transitional phase characterized by high risks of failure or becoming acquisition targets. We examine the factors that drive the acquisition of new public firms shortly after their IPO. We find that intense product market competition increases the likelihood of these firms becoming acquisition targets. Furthermore, we set the opposite boundary conditions of firm-level linkages. Whereas strategic alliances mitigate the risk of being acquired, connections through common institutional ownership (CIO) amplify it. We corroborate our hypotheses using IPO firms in the US from 1990 to 2018. This study contributes to the IPO literature and advances understanding of the implications of CIO in the post-IPO context.
