Venture Capital Investments, Mergers and Competition Laws around the World

We examine the relation between venture capital (VC) investments, M&A activity, and merger competition laws 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 viable exit opportunities for VC companies and therefore incentivizes them to engage in more deals. We also explore the effects of country-level merger competition laws and also pro-takeover legislation passed internationally on VC activity. We find significant reductions in VC activity in countries with stricter competition laws and find that VC activity intensifies after enactment of country-level takeover-friendly legislation.

Keywords: Venture Capital, Mergers and Acquisitions, Merger Waves, Takeover Laws

JEL Classification: G15, G24, G33

Suggested Citation: Suggested Citation

Phillips, Gordon M. and Zhdanov, Alexei, Venture Capital Investments, Mergers and Competition Laws around the World (June 16, 2018). Tuck School of Business Working Paper No. 3072665, Available at SSRN: https://ssrn.com/abstract=3072665 or http://dx.doi.org/10.2139/ssrn.3072665