Faculty of Economics and Business Administration Publications Database

Are VC-backed IPOs delayed Trade Sales?

Gill, Andrej
ISSN-Print: 0929-1199
Link External Source: Online Version
Year: 2016
Keywords: Delisting; Takeovers; VC-backed IPOs; Corporate Governance

We investigate the role of venture-backing at the time of the initial public offering for the decision to subsequently be taken over and leave the exchange. We show, controlling for firm characteristics as well as the endogeneity of the involvement of VC, that VC-backed firms are significantly more likely to leave the exchange in the course of a take over. Our analysis sheds new light on decisions to go private, and even more so on the process of going public for VC-backed firms. Our findings suggest that, in a significant number of cases, VC-backed IPOs can be interpreted as delayed trade sales.