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Buying and Selling Entrepreneurial Assets

Sumudu Kankanamge and Alexandre Gaillard ()

No 20-1078, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: How are the options to buy and sell a business relevant for entrepreneurs? Prospective entrepreneurs value the purchase of mature firms while incumbents want to recover both the tangible and intangible value of their businesses upon exit. We introduce a theory of entrepreneurial assets transfer consistent with empirical evidence and centered around a businesses for sale market that lets entrepreneurs trade the maturity components of their firms. We find that shutting that market down leads to a substantial drop in aggregate output and alters the pool of firms, incentives to enter and exit, and the wealth distribution.

Keywords: Entrepreneurship; Business transfers; Maturity value; Intangible assets (search for similar items in EconPapers)
JEL-codes: D40 E22 E23 J24 (search for similar items in EconPapers)
Date: 2020-02
New Economics Papers: this item is included in nep-bec, nep-dge, nep-ent, nep-fdg, nep-ind, nep-mac and nep-sbm
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