Department
Management and Entrepreneurship
Document Type
Article
Publication Date
12-2001
Abstract
This study examines how the presence of venture capitalists (VCs) in closely held IPOs relates to their performance. It also identifies other factors that are related to the performance of closely held IPOs. Closely held firms in this study had an average of 88% insider ownership before the IPO. In general, we find that closely held IPOs benefit from associations with VCs. This finding suggests that VCs' outside expertise and connections are valuable assets. Because it takes time for VCs to effect changes and because beneficial changes generally occur gradually, firms contemplating IPOs must plan well in advance to maximize firm value. Family-controlled firms contemplating growth or liquidity options through the IPO, VCs, or other outside capital should consider the findings of this study because it identifies factors that are associated with more successful IPO outcomes.
Journal Title
Family Business Review
Journal ISSN
0894-4865
Volume
14
Issue
4
First Page
295
Last Page
312
Digital Object Identifier (DOI)
10.1111/j.1741-6248.2001.00295.x