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Publications
Publications
  • 2009
  • Other Unpublished Work

Bridge Building in Venture Capital-Backed Acquisitions

By: Paul A. Gompers and Yuhai Xuan
  • Format:Print
  • | Language:English
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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.
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About The Author

Paul A. Gompers

Finance
→More Publications

More from the Authors

    • March–April 2021
    • Harvard Business Review

    How Venture Capitalists Make Decisions

    By: Paul A. Gompers, Will Gornall, Steven Kaplan and Ilya Strebulaev
    • December 2020
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    Entrepreneurial Finance Vignettes - 2021

    By: Paul A. Gompers
    • 2020
    • Faculty Research

    Private Equity and COVID-19

    By: Paul A. Gompers, Steven N. Kaplan and Vladimir Mukharlyamov
More from the Authors
  • How Venture Capitalists Make Decisions By: Paul A. Gompers, Will Gornall, Steven Kaplan and Ilya Strebulaev
  • Entrepreneurial Finance Vignettes - 2021 By: Paul A. Gompers
  • Private Equity and COVID-19 By: Paul A. Gompers, Steven N. Kaplan and Vladimir Mukharlyamov
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