News that RBS plans to divest its RBS Citizens Financial group is an opportunity to discuss two interesting uses of the IPO. First, RBS has been unsuccessful in attracting a merger or buyout (M&A)_offer, and so instead they may sell to IPO investors. M&A offers come from sophisticated buyers (e.g., competitors) while IPOs attract investors from across the spectrum. Should investors be interested a deal that does not attract sophisticated buyers? Bear in mind that my commentary has nothing to do with RBS Citizens specifically, but rather this general category of IPOs.  A second key use of the IPO is also at play. RBS is using the (threat of) IPO filing to better their negotiating position and to attract an M&A bid. Filing creates a real option — the option to exercise the IPO in lieu of a satisfactory M&A bid. This is known as “dual-tracking”, and research (e.g., Lian & Wang, 2007) shows that firms using the IPO option increase the acquisition premium by some 58%. When used and timed properly, dual tracking can be a very successful tactic.