Technological Diversification, Cumulativeness and Venture Capital Exit: M&A Versus IPO

Babson College Entrepreneurship Research Conference (BCERC) 2007

Frontiers of Entrepreneurship Research 2007

13 Pages Posted: 6 Dec 2007

See all articles by Marianna Makri

Marianna Makri

University of Miami - Department of Management

Marc Junkunc

Washington and Lee University

Jon Eckhardt

University of Wisconsin - Madison

Abstract

Venture capitalists that specialize in providing funds to privately held firms generate their greatest returns from firms that go public. However, we argue that the technology regime of an industry affects the extent of knowledge asymmetries between different types of owners and subsequently the mode of exit for venture capitalists. More specifically, we suggest that the degree of technological diversification and technological cumulativeness of an industry will have a positive effect on the likelihood that a venture capital firm will exit its investment in a technology firm via a merger or an acquisition as opposed to taking it public.

Keywords: Entrepreneurship

JEL Classification: M13

Suggested Citation

Makri, Marianna and Junkunc, Marc and Eckhardt, Jonathan T, Technological Diversification, Cumulativeness and Venture Capital Exit: M&A Versus IPO. Babson College Entrepreneurship Research Conference (BCERC) 2007; Frontiers of Entrepreneurship Research 2007. Available at SSRN: https://ssrn.com/abstract=1059541

Marianna Makri (Contact Author)

University of Miami - Department of Management ( email )

United States

Marc Junkunc

Washington and Lee University ( email )

Lexington, VA 24450
United States

Jonathan T Eckhardt

University of Wisconsin - Madison ( email )

716 Langdon Street
Madison, WI 53706-1481
United States

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