The company may not be the vendor of the shares in the following situations:

• Founders are selling out

• Other investors are selling shares

• Venture capital exits

• Reverse leveraged buy-outs (LBOs)

• Parent companies selling subsidiaries

• Privatizations.

When the vendor and the company are not the same party, the vendor's number one objective is to maximize the value of its shareholding. This may mean accepting a low price on the IPO or not selling any/all shares when the company first comes to market. In fact, many selling shareholders do not divest all their shares at the time of the IPO. Therefore, a strong share price performance in the aftermarket is important. Shareholders such as venture capitalists (VCs) recognize that they will need to return to the stock market at least one more time to fully realize the value of their investment in the company undertaking an IPO.

For example, Citicorp Venture Capital realized the value of patience by not selling any of its shares in Fairchild Semiconductors' 1999 IPO at a price of $18.50 per share. Five months later when the company returned to the equity market Citicorp sold shares at $33.44, increasing its proceeds by 80 per cent compared to the IPO price.