Venture Capital Exit Rights

34 Pages Posted: 5 Jun 2008 Last revised: 18 Dec 2010

See all articles by Carsten Bienz

Carsten Bienz

Norwegian School of Economics (NHH)

Uwe Walz

Goethe University Frankfurt - Institute of Economics; Leibniz Institute for Financial Research SAFE

Date Written: February 1, 2010


We investigate when and how venture capital contracts use exit rights such as drag-along and tag-along rights. Utilizing a data set of venture capital contracts from Germany, we find that almost all contracts allocate exit rights to the venture capitalist (VC) rather than to the entrepreneur. In our data set, the vast majority of exit rights deal with the sale of the entire company to a strategic investors rather than with initial public offerings. We show that venture capital contracts include exit rights to mitigate potential hold-up problems of the VC in the case of exit.

Keywords: venture capital, corporate governance, empirical contract theory, hold-up, exit rights, trade-sale rights

JEL Classification: G24, G34, D80

Suggested Citation

Bienz, Carsten and Walz, Uwe, Venture Capital Exit Rights (February 1, 2010). Available at SSRN: or

Carsten Bienz (Contact Author)

Norwegian School of Economics (NHH) ( email )

Helleveien 30

Uwe Walz

Goethe University Frankfurt - Institute of Economics ( email )

Postfach 81
D-60054 Frankfurt

Leibniz Institute for Financial Research SAFE ( email )

Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323

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