Harvesting Value From Entrepreneurial Success

Kensinger, John W.; Martin, John D.; Petty, J. William

doi:10.1111/j.1745-6622.2000.tb00021.x

Cited by 13 publications

(10 citation statements)

References 18 publications

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“…We first make a distinction between the two forms of liquidity events. Among liquidity events, IPOs are generally considered to provide the greater potential returns, and many entrepreneurs consider an IPO to be the most desired form of ‘harvest’ (e.g., Kensinger, Martin, and Petty, ). As young firms signal to the external environment their viability through alliances and alliance portfolios, we expect that certain characteristics of these portfolios will more likely result in an IPO rather than an acquisition.…”

Section: Theory and Hypothesesmentioning

confidence: 99%

Unpacking functional alliance portfolios: How signals of viability affect young firms' outcomes

Hoehn‐Weiss

Karim

2013

Strategic Management Journal

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This article investigates how alliance portfolio composition affects young firms' outcomes. Drawing on signaling theory, we propose how alliance portfolio composition—number, functional domains (R&D, manufacturing, and marketing), and single‐purpose or multi‐purpose nature of alliances within the portfolio—may affect a firm's likelihood of achieving a liquidity event (IPO or acquisition). We study 8,600 U.S.‐based, VC‐backed firms during the period of 1990 to 2002 from 10 industry sectors. We find that alliance portfolios (to a certain extent) increase a firm's liquidity event likelihood. Further, firms with heterogeneous alliance portfolios, including portfolios emitting greater efficiency signals versus endorsement signals, are more likely to experience an IPO versus acquisition. Our findings lend support to the value of multi‐function alliances within portfolios. Copyright © 2013 John Wiley & Sons, Ltd.

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Section: Theory and Hypothesesmentioning

confidence: 99%

Unpacking functional alliance portfolios: How signals of viability affect young firms' outcomes

Hoehn‐Weiss

Karim

2013

Strategic Management Journal

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“…Although both of these transaction types give the firm, its managers, and investors access to public capital markets, academic studies and the popular press focus primarily on IPOs. Entrepreneurs often say that an IPO is the most desired form of “harvest” (see, e.g., Kensinger, Martin, and Petty, 2000). However, Sahlman (1990) finds that in the 1980s, more VC‐backed firms resulted in sellouts than in IPOs (709 sellouts compared to 555 IPOs).…”

Section: Introductionmentioning

confidence: 99%

“…Entrepreneurs often say that an IPO is the most desired form of "harvest" (see, e.g., Kensinger, Martin, and Petty, 2000). However, Sahlman (1990) finds that in the 1980s, more VC-backed firms resulted in sellouts than in IPOs (709 sellouts compared to 555 IPOs).…”

Section: Introductionmentioning

confidence: 99%

Moving from Private to Public Ownership: Selling Out to Public Firms versus Initial Public Offerings

Poulsen

Stegemoller

2008

Financial Management

179

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"We study two alternative means to move assets from private to public ownership: through the acquisition of private companies by firms that are public (sellouts) or through initial public share offerings (IPOs). We consider firm-specific characteristics for 1,074 IPO and 735 sellout firms to identify differences in growth, capital constraints, and asymmetric information between the two types of transactions. Our results suggest that firms move to public ownership through an IPO when they have greater growth opportunities and face more capital constraints. We provide a better understanding of the firm-specific characteristics that lead firms to go public." Copyright 2008 Financial Management Association International..

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“…Crafting an exit strategy should be done long before the need arises (Kensinger et al, 2000). Investors therefore also need to decide on whether to prepare their business for a financial or strategic exit.…”

Section: Literature Reviewmentioning

confidence: 99%

The role of the exit in the initial screening of investment opportunities: The case of business angel syndicate gatekeepers

Mason

Botelho

2016

International Small Business Journal

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Mason, C., and Botelho, T. (2016) ABSTRACT. The exit process has been largely ignored in business angel research.. The practitioner community identifies the difficulty in achieving exits as the most pressing problem for investors. This has been attributed to the failure of investors to adopt an exitcentric approach to investing. The validity of this claim is examined via a study of the investment approach of 21 'gatekeepers' (managers) of angel groups in Scotland and Northern Ireland. Most gatekeepers say that they do consider the exit when they invest. However, this is contradicted by a verbal protocol analysis which indicates that the exit is not a significant consideration in their initial screening process. The small number of exits achieved by the groups is consistent with the general lack of an exit-centric approach to investing. Only three groups exhibit evidence of a strong exit-centric approach to investing. The lack of exits may have a negative impact on the level of future angel investment activity.

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Harvesting Value From Entrepreneurial Success

Cited by 13 publications

References 18 publications

Unpacking functional alliance portfolios: How signals of viability affect young firms' outcomes

Unpacking functional alliance portfolios: How signals of viability affect young firms' outcomes

Moving from Private to Public Ownership: Selling Out to Public Firms versus Initial Public Offerings

The role of the exit in the initial screening of investment opportunities: The case of business angel syndicate gatekeepers

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