Abstract

http://ssrn.com/abstract=1102504
 
 

References (27)



 
 

Citations (9)



 


 



Bridge Building in Venture Capital-Backed Acquisitions


Paul A. Gompers


Harvard Business School - Finance Unit; Harvard University - Entrepreneurial Management Unit; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Yuhai Xuan


Harvard Business School

February 1, 2009

AFA 2009 San Francisco Meetings Paper

Abstract:     
We study the role of common venture capital investors in alleviating asymmetric information between public acquirers and private venture capital-backed targets. We find that acquisition announcement returns are more positive for acquisitions in which both the target and the acquirer are financed by the same venture capital firm. Similarly, having a common investor increases the likelihood that a transaction will be all equity-financed and the likelihood that an acquisition will take place. Our results suggest that common venture capital investors can form a bridge between acquiring and target firms that reduces asymmetric information associated with the transaction for both parties.

Number of Pages in PDF File: 46

Keywords: Venture capital, mergers and acquisitions, private companies

JEL Classification: G24, G34

working papers series


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Date posted: March 7, 2008 ; Last revised: March 16, 2009

Suggested Citation

Gompers, Paul A. and Xuan, Yuhai, Bridge Building in Venture Capital-Backed Acquisitions (February 1, 2009). AFA 2009 San Francisco Meetings Paper. Available at SSRN: http://ssrn.com/abstract=1102504 or http://dx.doi.org/10.2139/ssrn.1102504

Contact Information

Paul A. Gompers
Harvard Business School - Finance Unit ( email )
Boston, MA 02163
United States
617-495-6297 (Phone)
617-496-8443 (Fax)
Harvard University - Entrepreneurial Management Unit ( email )
Cambridge, MA 02163
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Yuhai Xuan (Contact Author)
Harvard Business School ( email )
Baker Library 347
Boston, MA 02163
United States
617-495-5348 (Phone)
HOME PAGE: http://www.people.hbs.edu/yxuan/
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