Venture capital and methods of payment in mergers and acquisitions

Giang Nguyen and Hung Pham
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Giang Nguyen: EM - EMLyon Business School
Hung Pham: NEU - National Economics University [Hanoï, Vietnam]

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Abstract: We find evidence that venture capital (VC)-backed targets receive more stock as the method of payment in mergers and acquisitions than non-VC-backed targets do, even after controlling for self-selection bias, differences of characteristics between transactions of VC-backed and non-VC-backed targets and VC information bridge-building. VC-backed targets prefer stock of acquirers that are small, young, risky or invest intensively. In addition, we document that the ratio of stock is larger when the targets are financed by reputable VCs, a syndicate of VCs or VCs with low fund maturity. Overall, our findings suggest that VCs strategically hold shares of the acquirers that meet their investment preferences.

Keywords: Venture capital; Merger and acquisition; Method of payment (search for similar items in EconPapers)
Date: 2024-05
New Economics Papers: this item is included in nep-cfn, nep-com and nep-pay
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Published in Journal of Business Finance and Accounting, 2024, 51 (5-6), 1251-1272 p. ⟨10.1111/jbfa.12750⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04325755

DOI: 10.1111/jbfa.12750

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