Decision-making of Exit in Venture Capital: Real Options

摘要

Two important issues in exit of venture capital, exit timing and exit approaches, are analyzed. Based on the real options theory and the contingent claims analysis, it develops approach-selecting models in terms of Trade-sales and Initial Public Offers and corresponding timing models. Furthermore, thresholds of cash flows as well as value of real options are derived. Finally, decision criteria of exit of venture capital are obtained and empirical evidence shows that the criteria agree with the real investment activities very well.