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Are VC-backed IPOs delayed trade sales?

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  • Gill, Andrej
  • Walz, Uwe

Abstract

We investigate the role of venture-backing at the time of the initial public offering for the decision to subsequently be taken over and leave the exchange. We show, controlling for firm characteristics as well as the endogeneity of the involvement of VC, that VC-backed firms are significantly more likely to leave the exchange in the course of a take over. Our analysis sheds new light on decisions to go private, and even more so on the process of going public for VC-backed firms. Our findings suggest that, in a significant number of cases, VC-backed IPOs can be interpreted as delayed trade sales.

Suggested Citation

  • Gill, Andrej & Walz, Uwe, 2016. "Are VC-backed IPOs delayed trade sales?," Journal of Corporate Finance, Elsevier, vol. 37(C), pages 356-374.
    • Handle: RePEc:eee:corfin:v:37:y:2016:i:c:p:356-374
    DOI: 10.1016/j.jcorpfin.2016.01.007
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    Cited by:

    1. Diego Useche & Sophie Pommet, 2021. "Where do we go? VC firm heterogeneity and the exit routes of newly listed high-tech firms," Small Business Economics, Springer, vol. 57(3), pages 1339-1359, October.
    2. Tereza Tykvová, 2018. "Venture capital and private equity financing: an overview of recent literature and an agenda for future research," Journal of Business Economics, Springer, vol. 88(3), pages 325-362, May.
    3. Helbing, Pia & Lucey, Brian M. & Vigne, Samuel A., 2019. "The determinants of IPO withdrawal – Evidence from Europe," Journal of Corporate Finance, Elsevier, vol. 56(C), pages 415-436.
    4. Amor, Salma Ben & Kooli, Maher, 2020. "Do M&A exits have the same effect on venture capital reputation than IPO exits?," Journal of Banking & Finance, Elsevier, vol. 111(C).
    5. Dong, Qi & Slovin, Myron B. & Sushka, Marie E., 2020. "Private equity exits after IPOs," Journal of Corporate Finance, Elsevier, vol. 64(C).
    6. Diego Useche & Sophie Pommet, 0. "Where do we go? VC firm heterogeneity and the exit routes of newly listed high-tech firms," Small Business Economics, Springer, vol. 0, pages 1-21.

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    More about this item

    Keywords

    Delisting; Takeovers; VC-backed IPOs; Corporate governance;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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