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Venture capital and methods of payment in mergers and acquisitions

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  • Giang Nguyen

    (EM - EMLyon Business School)

  • Hung Pham

    (NEU - National Economics University [Hanoï, Vietnam])

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.

Suggested Citation

  • Giang Nguyen & Hung Pham, 2024. "Venture capital and methods of payment in mergers and acquisitions," Post-Print hal-04325755, HAL.
    • Handle: RePEc:hal:journl:hal-04325755
    DOI: 10.1111/jbfa.12750
    Note: View the original document on HAL open archive server: https://hal.science/hal-04325755
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    References listed on IDEAS

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    Keywords

    Venture capital; Merger and acquisition; Method of payment;
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