Venture Capital Investments and Merger and Acquisition Activity Around the World
65 Pages Posted: 20 Nov 2017 Last revised: 16 Jun 2018
Date Written: June 16, 2018
We examine the relation between venture capital (VC) investments and mergers and acquisitions (M&A) activity in 48 countries around the world. We find evidence of a strong positive association between VC investments and lagged M&A activity, consistent with the hypothesis that an active M&A market provides exit opportunities for VC companies and therefore incentivizes them to invest. We also explore the effects of country-level pro-takeover legislation passed internationally and U.S. state-level antitakeover business combination laws on VC activity. VC activity intensifies after enactment of country-level takeover friendly legislation and decreases following passage of state antitakeover laws in the U.S.
Keywords: Venture Capital, Mergers and Acquisitions, Merger Waves, Takeover Laws
JEL Classification: G15, G24, G33
Suggested Citation: Suggested Citation