The Venture Capital firms' control rights impact on the selection of exit outcome

Abstract

This thesis empirically considers Venture Capital (VC) firms’ preferences of control rights and their relationship with preferences to selection of exit outcomes. The thesis is based on Cumming (2008) and has quantitative approach performed on 43 VC firms that are active on the Swedish market. The aim of the thesis is to describe the VC firms’ preferences of control rights and the selection of exit outcome, and explain their relationship. This research also considers the VC firms’ preferences of investment characteristic impact on selection of exit outcome. The result indicates that the VC firms on the Swedish market prefer acquisition as exit outcome rather than IPO and the most preferable control right is veto right. We found a positive relationship between the right to replace the founder CEO and acquisition. The research also suggests that several investment characteristics have a relationship with IPO and acquisition.