Bridge building in venture capital-backed acquisitions
By: Paul A. Gompers and Yuhai Xuan
Contributors: Xuan, Yuhai; Harvard Business School
Series: Working paper / Harvard Business School -- 08-084; Working paper (Harvard Business School) -- 08-084
Publisher: Harvard Business School
Published: 2008
Place of publication: Boston]
Language: eng
Number of pages: 38
Description: We compare three potential mechanisms for alleviating the asymmetric information between the public acquirers and private venture capital-backed targets. First, because venture capitalists repeatedly sell their portfolio companies through acquisitions, venture capitalists may be able to certify the quality of the assets that an outside party is buying because they are "staking their reputation" on not selling overvalued assets. Second, personal and professional relationships may "bridge" the asymmetric information. This bridge may be particularly strong if both firms were financed by the same venture capital firm. Third, geographic proximity may also reduce the asymmetric information between a target and an acquiring firm.
Notes: "March 2008"--Publisher's web site.

Includes bibliographical references.