Download or read book Post Ipo Performance and the Exit of Venture Capitalists written by Tilo Kraus and published by . This book was released on 2003 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: We test several implications of venture capital investment for the post-IPO performance of firms using data of 312 IPOs on Germany's Neuer Markt. Through tighter corporate control, third party certification and a reduced heterogeneity of opinions companies financed by Venture Capital firms might outperform their counterparties in the aftermarket of an IPO. However, this positive effect of VC backing on aftermarket performance could be reversed when Venture Capitalists seek exit from their investment. The discontinuation of a blockholder's exercised corporate control, signalling of insider knowledge as well as possible downward sloping demand curves provide an analytical framework that explains why the return series of VC backed IPOs might show a significant breakpoint at the time when Venture Capitalists exit from their investments. Our empirical evidence suggests that the expiration of lock-up periods as the earliest possible point of time for an exit represents such as breakpoint as Venture Capital backed IPOs outperform their counterparts before, but underperform around and after the expiration.

Download or read book IPOs of Venture Capital Backed Ventures written by Christian Mehrer and published by GRIN Verlag. This book was released on 2003-11-02 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: Studienarbeit aus dem Jahr 2002 im Fachbereich BWL - Investition und Finanzierung, Note: 1,3, European Business School - Internationale Universität Schloß Reichartshausen Oestrich-Winkel (-), Veranstaltung: Seminar des Wahlpflichtfaches Finanzierung und Banken, Sprache: Deutsch, Abstract: The topic of this paper is the difference of venture capital (VC) backed initial public offerings (IPOs) and non backed IPOs and the share price performance of the companies after the IPO. Compared to non-backed IPOs, VC backed IPOs consist on average of younger and less profitable firms. Nevertheless, VC backed companies have better underwriters, more institutional investors and less underpricing (i.e. a discount on the initial share price due to asymmetrical information). It is therefore considered that the venture capitalist (VCist) has an important impact on the share price performance of the young firm due to his certification role. By screening and mentoring the backed venture in earlier stages of the VC cycle, he can well assess the business’ opportunities. Thus, if he invests in the venture and keeps shares after the IPO, he can proof credibility to other investors (credibility hypothesis). However, younger VCists tend to bring companies too quickly to the stock markets, because they need an IPO for building up a reputation (grandstanding hypothesis). This may be adverse to the venture. Our findings also outline that there is no clear advantage of VC-backed firms on the long-run. Thus, we conclude that it is not only important to think about a VC backing, but also about the VCist that is backing. Choosing the wrong VCist may even have a negative impact on the company’s future.

Download or read book Venture Capital Investments Exits and Post IPO Performance written by Milan Martinovic and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Three Essays on Venture Capital Post IPO Involvement written by Anup Basnet and published by . This book was released on 2021 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Even though the VC literature acknowledges that VCs do not completely exit at the IPO and frequently stay invested long after an IPO, little attention has been paid towards how VCs exit post-IPO and how their exits affect the governance of their portfolio companies (PCs). We use a unique hand-collected VC ownership dataset derived from various SEC filings and examine VC exit patterns and how they relate to both the performance of their portfolio companies and to external governance mechanisms (e.g., litigation). In the first essay, we examine how the ownership stakes of lead VCs evolve after their PCs are publicly listed. Lead VCs retain their holdings, on average, for three years post-IPO, and their primary exit mechanisms include share distributions (SDs), continuous sales in the open market (C Sales), and mergers and acquisitions (M&As). We find that the VC investment period before the IPO, the PC age before the IPO, and the percentage change in the post-IPO stock price all incentivize earlier VC exits and drive the choice of exit mechanism. Our results suggest that lead VCs remain invested longer when PCs are of better quality, when lead VCs have more experience in taking companies public, and when lead VCs hold positions in the companies' compensation committees. In the second essay, we study whether VCs act opportunistically by exiting their PCs via an unfavorable merger. Employing a sample of 697 M&A offers for VC-backed IPO companies from 1996 to 2018, we find that takeover bids that occur in the presence of lead VCs command a higher initial premium and are less likely to be legally contested compared to bids for companies from which the lead VC has already exited. In addition, these companies enjoy higher stock price returns in response to the M&A announcement and muted price declines around the litigation date. We also document the importance of several lead VC characteristics in determining their portfolio companies' litigation risk. In the third essay, we examine the influence of VCs' need to exit on post-IPO M&A activity. Using a sample of US VC-backed IPO companies from 1996 to 2014, we show that the presence of a lead VC indeed increases the probability of a portfolio company receiving a post-IPO takeover bid. However, to facilitate the merger, they do not influence the PC's management to avoid anti-takeover provisions. M&As that happen in the presence of lead VCs are completed faster and benefit the target shareholders by providing a higher takeover premium. Besides, acquirers of lead VC present companies do not suffer in terms of short or long-term market value.

Download or read book Venture Capital and Initial Public Offering written by Weicheng Wang and published by . This book was released on 2010 with total page 99 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Venture Capital Reputation Post IPO Performance and Corporate Governance written by C. N. V. Krishnan and published by . This book was released on 2011 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the association of a venture capital (VC) firm's reputation with the post-IPO long-run performance of its portfolio firms. We find that VC reputation, measured by the past market share of VC-backed IPOs, has significant positive associations with long-run firm performance measures. While more reputable VCs initially select better quality firms, more reputable VCs continue to be associated with superior long-run performance, even after controlling for VC selectivity. We find more reputable VCs exhibit more active post-IPO involvement in the corporate governance of their portfolio firms and this continued VC involvement positively influences post-IPO firm performance.

Download or read book Post IPO Performance of Venture Capital Backed Firms written by Severin Stefanini and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The following bachelor thesis examines the influence of venture capital backing on the post-initial public offering performance of respective portfolio firms. Thus, the study analyzes potential differences in company development between venture capital backed firms and entities that used other financing structures during the pre-initial public offering period. It is assumed that venture capital backed IPOs perform better in the immediate after-market due to the ability of venture capitalists to reduce costs of going public. Furthermore, they are presumed to achieve superior long- run performance when compared to non-venture capital backed companies. T-statistics as well as cross-sectional regression results find no statistically significant influence of venture capital backing on initial returns and gross spread rates. However, long-term results show that firms backed by venture capitalists, indeed, realize larger total as well as comparative rates of return. In particular, differences in performance over a two- respectively three-year period after the offering were found to be statistically significant.

Download or read book The Oxford Handbook of IPOs written by Douglas Cumming and published by Oxford University Press. This book was released on 2018-11-15 with total page 504 pages. Available in PDF, EPUB and Kindle. Book excerpt: Initial public offerings (IPOs), or new listings of companies on stock exchanges, are among the most important form of finance and generate considerable attention and excitement. They are used to raise capital or to monetize investments by the early generation of venture capital and other private investors. They are increasingly international in scope and reach, especially with non-American firms offering on American stock exchanges. This handbook provides a comprehensive overview of why companies list on stock exchanges, how IPOs are regulated, initially valued, and their performance in the short and long run. The first part examines the economics of IPOs, and offers statistics and regulatory insights from the United States and other countries around the world. The volume then covers mergers versus IPOs, as well as reverse mergers and special purpose acquisition companies. Part III analyzes institutional ties in IPOs, including analysts, investment banks, auditors, and venture capitalists. The fourth section provides international perspectives on IPOs from a number of countries around the world. Part V discusses alternatives to IPOs, including private marketplaces, and crowdfunding. Reflecting the range of disciplines that analyze IPOs, the contributors come from the fields of finance, international business and management, economics, and law. The chapters cover the latest information on a range of fundamental questions that are of interest to academics, practitioners, and policymakers alike.

Download or read book How Venture Capital Works written by Phillip Ryan and published by The Rosen Publishing Group, Inc. This book was released on 2012-07-01 with total page 82 pages. Available in PDF, EPUB and Kindle. Book excerpt: Explanations to the inner workings of one of the least understood, but arguably most important, areas of business finance is offered to readers in this engaging volume: venture capital. Venture capitalists provide necessary investment to seed (or startup) companies, but the startup is only the beginning, there is much more to be explored. These savvy investors help guide young entrepreneurs, who likely have little experience, to turn their businesses into the Googles, Facebooks, and Groupons of the world. This book explains the often-complex methods venture capitalists use to value companies and to get the most return on their investments, or ROI. This book is a must-have for any reader interested in the business world.

Download or read book Venture Capitalists Exit Strategies under Information Asymmetry written by Matthias Eckermann and published by Springer Science & Business Media. This book was released on 2007-10-17 with total page 301 pages. Available in PDF, EPUB and Kindle. Book excerpt: Matthias Eckermann analyzes how venture capitalists (VCs) integrate information efficiency considerations into their exit strategies. He shows that VCs adopt specific strategies to cope with information gaps upon exit in terms of timing, exit vehicles and promotion efforts. On this basis he develops a framework to help VCs to improve profitability through decisive exit strategies.

Download or read book The Impact of Venture Ecapital on Post IPO Operating Performance and Related Aspects of Firm Behavior written by Sam Mensah and published by . This book was released on 1994 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Venture Capital Investment and the Post IPO Performance of Entrepreneurial Firms written by Di Guo and published by . This book was released on 2016 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the effects of venture capital (VC) investment on the performance (measured by return on assets, return on equity, and Tobin's Q) and growth (measured by growth of total sales and total number of employees) of entrepreneurial firms in the People's Republic of China (PRC) after an initial public offering (IPO). Firm-level panel data analysis shows that VC investment contributes to the long-term performance and growth of entrepreneurial firms after an IPO. Meanwhile, we observe a significant and positive relationship between corporate governance of firms and VC investment. However, we do not find that experience or specialization of VC firms influences the effects of venture investment on post-IPO performance or growth of entrepreneurial firms in the PRC.

Download or read book The Exit Decision in Venture Capital How to Choose Exit Timing and Exit Route written by Heinrich Stilling and published by GRIN Verlag. This book was released on 2019-10-23 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: Academic Paper from the year 2014 in the subject Business economics - Investment and Finance, grade: 1,7, Technical University of Munich, language: English, abstract: The focus of this paper lies on answering the questions, what factors should be considered to successfully exist a venture with regard to exit timing and routing and how these strategic choices are interrelated. The divestment process plays a critical role in the Venture Capital (VC) business model. Typically, a VC invested venture is not able to pay dividends prior to its exit as the business has not fully matured yet. Therefore, a Venture Capital Firm (VCF) generates virtually all of its income by realizing capital gains at the time of the venture’s exit. This indicates that a VCF heavily depends on a successful divestment transaction - in most cases, a poor exit execution leads to an inferior return on investment which in turn can ruin the VCF’s overall performance. A VCF therefore plans its exits carefully and evaluates its strategic choices. In this context, the two most important exit decision variables considered by a VCF are the choice of exit route and the choice of exit timing. By choosing the right exit route and pursuing good exit timing, a VCF can significantly increase its proceeds for a given venture. The primary focus of this paper lies on answering these aforementioned questions by drawing together the empirical research on these two dominant strategic exit choices.

Download or read book Why Do Some Venture Capitalists Cash Out While Others Retain Their Stakes How Fund Dynamics Influence Venture Capital Exit Decisions written by Maximilian Schmidt and published by . This book was released on 2013 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: Although venture capital (VC) exits have been studied for over 20 years, major drivers are still in question. We examine the determinants of exit timing in initial public offerings (IPOs). The results from a proprietary dataset of 292 U.S. VC-backed IPOs from 1991 to 2008 imply that VC firm characteristics and fund dynamics have a significant influence on the exit extent and may not always be in line with limited partners' interests. In particular, first-time funds keep their shares longer after an IPO, whereas funds satisfied with current fund performance cash out soon after the end of the lockup period.

Download or read book The Price of Rapid Exit in Venture Capital Backed Ipos written by Silvia Rossetto and published by . This book was released on 2006 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper proposes an explanation for two empirical puzzles surrounding initial public offerings (IPOs). Firstly, it is well documented that IPO underpricing increases during quot;hot issuequot; periods. Secondly, venture capital (VC) backed IPOs are less underpriced than non venture capital backed IPOs during normal periods of activity, but the reverse is true during hot issue periods: VC backed IPOs are more underpriced than non VC backed ones. This paper shows that when IPOs are driven by the initial investor's desire to exit from an existing investment in order to finance a new venture, both the value of the new venture and the value of the existing firm to be sold in the IPO can be partially signalled by the investor's choice of price and fraction of shares sold in the IPO. When this is the case, the availability of attractive new ventures increases equilibrium underpricing, which is what we observe during hot issue periods. Moreover, I show that underpricing is affected by the severity of the moral hazard problem between an investor and the firm's manager. In the presence of a moral hazard problem the degree of equilibrium underpricing is more sensitive to changes in the value of the new venture. This can explain why venture capitalists, who often finance firms with more severe moral hazard problems, underprice IPOs less in normal periods, but underprice more strongly during hot issue periods. Further empirical implications relating the fraction of shares sold and the degree of underpricing are presented.

Download or read book Post Ipo Operating Performance Venture Capitalists and Market Timing written by Jerry Coakley and published by . This book was released on 2004 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: We analyse the post-issue operating performance of 304 venture-backed and 264 non-venture UK IPOs 1985-2000. IPOs exhibit a significant five-year, post-issue operational decline over the full sample period. However this is driven by a particularly poor performance by venture-backed and non-venture IPOs during the 1998-2000 bubble while underperformance by both is insignificant 1985-1997. Cross-section regression results indicate a significantly positive relationship between post-IPO operating performance and venture capitalist certification 1985-1997 and a negative relationship with initial returns 1998-2000. We conclude that the bubble period points to the influence of both market timing and investor sentiment on long run operating performance.

Download or read book Acquisition and IPO Strategies for VC backed Companies written by and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Provides insider's perspectives on the best practices for venture capitalists who are pursuing an exit. The essays discuss the internal and external factors in timing an exit, as well as strategies for evaluating potential profitability.