Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • 2009
  • Other Unpublished Work

Bridge Building in Venture Capital-Backed Acquisitions

By: Paul A. Gompers and Yuhai Xuan
  • Format:Print
  • | Language:English
ShareBar

Abstract

We study the role of common venture capital investors in alleviating asymmetric information between public acquirers and private venture capital-backed targets. We find that acquisition announcement returns are more positive for acquisitions in which both the target and the acquirer are financed by the same venture capital firm. Similarly, having a common investor increases the likelihood that a transaction will be all equity-financed and the likelihood that an acquisition will take place. Our results suggest that common venture capital investors can form a bridge between acquiring and target firms that reduces asymmetric information associated with the transaction for both parties.

Keywords

Mergers and Acquisitions; Venture Capital; Private Equity; Knowledge Sharing; Market Transactions

Citation

Gompers, Paul A., and Yuhai Xuan. "Bridge Building in Venture Capital-Backed Acquisitions." 2009.
  • Read Now

About The Author

Paul A. Gompers

Entrepreneurial Management
→More Publications

More from the Authors

    • March 2025
    • Faculty Research

    Mobvoi's Path Through Market Challenges and Business Reinvention

    By: Paul A. Gompers and Shu Lin
    • March 14, 2025
    • Harvard Crimson

    Harvard Students Should Ignore Calls to Boycott Israel Trek

    By: Jesse M. Fried, Paul A. Gompers, Scott Kominers and Mark C. Poznansky
    • November 2024
    • Faculty Research

    Grab Returns: Riding the SPAC-tacular Highway?

    By: Paul Gompers, Graham Blanks and Sachin Srivastava
More from the Authors
  • Mobvoi's Path Through Market Challenges and Business Reinvention By: Paul A. Gompers and Shu Lin
  • Harvard Students Should Ignore Calls to Boycott Israel Trek By: Jesse M. Fried, Paul A. Gompers, Scott Kominers and Mark C. Poznansky
  • Grab Returns: Riding the SPAC-tacular Highway? By: Paul Gompers, Graham Blanks and Sachin Srivastava
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College.