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Full-Text Articles in Law
Should New Zealand Adopt Say On Pay?, Randall Thomas, Susan Watson
Should New Zealand Adopt Say On Pay?, Randall Thomas, Susan Watson
Vanderbilt Law School Faculty Publications
No abstract provided.
Carrots & Sticks: How Vcs Induce Entrepreneurial Teams To Sell Startups, Brian Broughman, Jesse Fried
Carrots & Sticks: How Vcs Induce Entrepreneurial Teams To Sell Startups, Brian Broughman, Jesse Fried
Vanderbilt Law School Faculty Publications
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 …