46 Pages Posted: 10 Jan 2011
Date Written: November 22, 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 (IPOs). We show that venture capital contracts include exit rights to mitigate potential hold?up problems of the VC in the case of exit.
Suggested Citation: Suggested Citation
Bienz, Carsten and Walz, Uwe, Venture Capital Exit Rights (November 22, 2010). Journal of Economics & Management Strategy, Vol. 19, Issue 4, pp. 1071-1116, 2010. Available at SSRN: https://ssrn.com/abstract=1733743 or http://dx.doi.org/10.1111/j.1530-9134.2010.00278.x
This is a Wiley-Blackwell Publishing paper. Wiley-Blackwell Publishing charges $38.00 .
File name: j-9134.
If you wish to purchase the right to make copies of this paper for distribution to others, please select the quantity.