Does being public actually help a company make acquisitions?

What did the study find?

The study, reported on the CLS Blue Sky Blog in July 2026, covered more than 6,000 IPO registrations from 1990 to 2024. Its findings cut both ways.

On the side of "yes, it helps":

• Completing an IPO raised a firm's annual probability of making an acquisition by about 12 percentage points.
• About three-quarters of the extra acquisitions were at least partly paid in stock. Public stock let firms do deals they would not otherwise have done.

On the side of "be careful":

• Stock-paid deals underperformed cash deals by 20–30 percentage points over 3–5 years.
• Stock-paid deals were about 50% more likely to end in delisting.

So being public expands what a company can buy. It does not improve the judgment behind the purchase.

Why does being public help a buyer?

Five reasons, each tied to the four levers of a holding company: capital, talent, opportunities and acquisitions.

1. Stock as currency. A seller can be paid partly in shares instead of cash or debt. That stretches the capital you have.
2. Access to capital. A public company can sell shares to raise cash for deals, rather than starting a new private raise each time.
3. A visible valuation. The market price tells sellers what your shares are worth. Private stock has no such reference.
4. A path to liquidity for sellers. Restricted shares in an SEC-reporting company can generally be resold under Rule 144 after a six-month holding period, subject to conditions. Confirm with securities counsel.
5. Talent. Listed equity can be used to recruit and keep managers, including owners who stay on after selling.

Why might stock-paid deals do worse?

The study reports the result. The reasons below are interpretation, not findings of the study, but they follow from how stock deals work:

• Stock feels cheaper than cash. A buyer paying in shares may accept a higher price than it would pay in cash.
• Sellers price the risk. A seller taking stock that may fall will ask for more of it.
• Stock is used most when it is expensive. When a company's shares are richly valued, using them feels free. If the valuation falls, the deals look worse.
• Dilution compounds. Each issuance spreads earnings over more shares. A run of deals that each look small can add up.

Castellum, listed on NYSE American, shows the last point. It paid more than 80% of a roughly $6.6M acquisition in restricted stock. Its share count rose from about 53M to about 94.6M between March 2024 and March 2026.

Worked example: what 12 percentage points means

The study measures a change in annual probability, not a guarantee. To see the scale, take a hypothetical private company with a 10% chance of making an acquisition in a given year.

1. Private: 10% chance a year.
2. Public: 10% + 12 points = 22% a year.
3. Over five years, treating each year as independent, the chance of at least one deal rises from 1 – 0.90 to the fifth power, about 41%, to 1 – 0.78 to the fifth power, about 71%.

The base rate is illustrative. The direction is the point. Being public makes a company noticeably more likely to buy, which is good only if each deal is priced and integrated well.

Main Street sellers lean toward cash. In the IBBA Market Pulse for Q2 2026, sellers received 83–92% of deal value in cash at close. A public holding company still needs cash in most deals. Stock usually fills part of the price, not all of it.

If you are thinking of listing to make acquisitions

Use the listing for the benefits the study found, and guard against the risks it found:

• Pay in stock only when your trading multiple is well above the multiple you pay.
• Mix cash, debt and seller notes with stock rather than paying all in shares.
• Set an annual limit on shares issued for acquisitions and report against it.
• Apply the same diligence to a stock deal as to a cash deal.

My view is that going public fits only a holding company with real earnings or a clear path to them, books an auditor can work with and an acquisition program. For what it costs to be public, see PublicFinancial on ongoing public-company costs.

Where these numbers come from: Acquisition probability, stock share of deals, underperformance and delisting figures are from the study reported on the CLS Blue Sky Blog, July 14, 2026. Castellum figures are from this case review. Cash at close is from the IBBA Market Pulse Q2 2026. The 10% base rate in the worked example is illustrative.

Related questions

Does the study apply to small holding companies?

It covers firms that registered for an IPO between 1990 and 2024, not specifically small holding companies. It is still large-sample evidence on stock as currency. Treat it as a warning about discipline, not a forecast.

Is cash always better than stock for the buyer?

Not always. Stock shares the risk with the seller and preserves cash and borrowing capacity. It costs more when your shares are undervalued, and it dilutes existing owners.

Can I get the acquisition benefits without listing?

Partly. Private stock, rollover equity and seller notes can stretch capital. They lack a market price and an easy exit, so sellers usually accept them less readily than public stock.

What comes next

See what real companies did after listing: which small holding companies have gone public, and what happened.

Related articles

• Public roll-up vs private roll-up: how does the math compare?
• Which small holding companies have gone public, and what happened?
• Can a holding company with $1 million to $5 million in revenue go public?
• Why do sellers accept public stock more readily than private stock?
• Should a holding company go public, and at what size?

Meraki Dealmakers is a service of Meraki Partners, LLC, an advisory firm. It is not a broker-dealer, investment adviser, business broker, law firm or accounting firm. This article is general information, not legal, tax or investment advice.