The GP-LP Conflict in Private Equity Funds Revisited: The Impact of Fund-Level Considerations on the Divestment Decision

Figge, Christian; Bauer, O.; Braun, Reiner; Achleitner, Ann‐Kristin

doi:10.2139/ssrn.2051441

Cited by 3 publications

(2 citation statements)

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“…The indirect pay for performance from future funds is about as large as the direct compensation from carried interest for private equity funds. Further, the choice of exit routes is influenced by fund characteristics such as the general partners' fundraising activities or the ratio of funds distributed to limited partners (Figge et al, 2012).…”

Section: Vc-backed Ipos and The Exit Decisionmentioning

confidence: 99%

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Should I stay, or should I go? – How fund dynamics influence venture capital exit decisions

Bock

Schmidt

2015

Rev Financ Econ

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We investigate the determinants of venture capital (VC) exit behavior after the lockup expiry in initial public offerings (IPOs) by considering insights from prospect theory and behavioral finance for the first time. Hereby, the paper concentrates on the under‐researched relationship between fund managers and the limited partners investing in these funds. The results from a proprietary dataset of 292 U.S. VC‐backed IPOs from 1991 to 2008 imply that VC firm characteristics and fund dynamics have a significant influence on the exit extent after the lockup expiry and may not always be in line with limited partners' interests, hinting at the relevance of behavior grounded in prospect theory. In particular, first‐time funds keep their shares longer after an IPO, whereas funds satisfied with current fund performance cash out soon after the end of the lockup period.

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Section: Vc-backed Ipos and The Exit Decisionmentioning

confidence: 99%

“…Second, it is the case that on the one hand a growing body of literature focuses on investigating the relationship between general and limited partners (Chung, Sensoy, Stern & Weisbach, 2012;Figge, Bauer, Braun & Achleitner, 2012;Kandel et al, 2011). But these papers do not empirically account for the timing of exit decisions.…”

Section: Introductionmentioning

confidence: 99%