The past few years have witnessed a resurgence in the mergers and acquisitions and initial public offering markets—particularly for health care. Many private companies have pursued a dual-track M&A/IPO process, in which the company simultaneously pursues an IPO and a confidential sale. The dual-track process has been growing in popularity among health care companies, since the IPO process can be helpful in generating momentum for a potential sale in a consolidating industry.

Examples of large private companies that have successfully gone down the dual-track road include Bausch & Lomb, which was nearing the launch of its IPO road show when it was bought by Valeant in May 2013, and Biomet, which had already filed with the Securities and Exchange Commission for an IPO when it announced its merger with Zimmer. And these are not the only examples.

Dual-track processes allow companies to leverage their preparatory work, and to some extent the publicity surrounding the SEC filing process for an IPO, to pursue both an IPO and a sale of the company simultaneously. In particular, the publicity around a potential IPO provides a deadline for potential acquirors, creating a greater sense of urgency to sign up a deal before the target goes public, since it is significantly more expensive and complicated–and riskier–to acquire a public company.