Open Access. Powered by Scholars. Published by Universities.®
Articles 1 - 3 of 3
Full-Text Articles in Law
Acqui-Hiring, Gregg D. Polsky, John F. Coyle
Acqui-Hiring, Gregg D. Polsky, John F. Coyle
Scholarly Works
Facebook, Google, and other leading technology companies in Silicon Valley have been buying start-up companies at a brisk pace. In many of these transactions, the buyer has little interest in acquiring the startup’s projects or assets. Instead, the buyer’s primary motivation is to hire some or all of the startup’s software engineers. These so-called “acqui-hires” represent a novel — and increasingly common — tool by which the largest and most successful technology companies in the world satisfy their intense demand for engineering talent.
To date, the acqui-hire has attracted no attention in the academic or professional legal literature. With this …
Independent Directors And Shared Board Control In Venture Finance, Brian J. Broughman
Independent Directors And Shared Board Control In Venture Finance, Brian J. Broughman
Articles by Maurer Faculty
In most VC-backed firms neither the entrepreneurs nor the VC investors control the board. Instead control is typically shared with a mutually appointed independent director holding the tie-breaking seat. Contract theory, which treats control as an indivisible right held by one party, does not have a good explanation for this practice. Using a bargaining game similar to final offer arbitration, I show that an independent director as tie-breaker can reduce holdup by moderating each party’s ex post threat position, potentially expanding the range of firms which receive external financing. This project contributes to the literature on incomplete contracting and holdup, …
Carrots And Sticks: How Vcs Induce Entrepreneurial Teams To Sell Startups, Brian J. Broughman, Jesse M. Fried
Carrots And Sticks: How Vcs Induce Entrepreneurial Teams To Sell Startups, Brian J. Broughman, Jesse M. Fried
Articles by Maurer Faculty
Venture capitalists (VCs) usually exit their investments in a startup via a trade sale. But the entrepreneurial team – the startup’s founder, other executives, and common shareholders – may resist a trade sale. Such resistance is likely to be particularly intense when the sale price is low relative to VCs’ liquidation preferences. Using a hand-collected dataset of Silicon Valley firms, we investigate how VCs overcome such resistance. We find, in our sample, that VCs give bribes (carrots) to the entrepreneurial team in 45% of trade sales; in these sales, carrots total an average of 9% of deal value. The overt …