Dual Track

A dual track means pursuing two exit routes at the same time, usually a sale and an IPO. The owner keeps both options open until it becomes clear which one delivers the better price. This increases competition and negotiating power, but also requires more effort.

In practice it means two parallel workstreams: on one side the information memorandum, data room and bidder process are prepared, on the other the prospectus, capital-markets-compliant accounts, governance, analyst presentations and outreach to institutional investors. The decision is taken late, often only once binding offers and first feedback from investor education are available, because only then can the two price levels be compared. The advantage lies less in the alternative itself than in its effect on negotiations: a bidder who knows the listing is a genuine option negotiates differently.

The process also provides protection against a closing window, since capital markets can become inaccessible at short notice. Against this stand considerable costs and a double burden on management, which must serve both processes at once. The difference in outcome also matters: a sale normally delivers a complete exit, while a listing initially places only part of the shares and ties the existing owner in through lock-up periods and subsequent share price performance.

The approach can be extended by a third route through a continuation fund. Several practical points besides price decide between the two routes. The first is the extent of the exit, since a sale is complete while a listing is initially partial. Further points are the certainty of proceeds, any deferred purchase price components and management's future role, since after a listing it is permanently bound to capital market requirements. The preferred route ultimately depends on the offers received, capital market conditions and the owners’ exit objectives.