TY  - UNPD
A1  - Nigro, Casimiro Antonio
A1  - Stahl, Jörg R.
T1  - Venture capital-backed firms, unavoidable value-destroying trade sales, and fair value protections
T2  - LawFin working paper ; No. 1
N2  - This paper investigates the implications of the fair value protections contemplated by the standard corporate contract (i.e., the standard contract form for which corporate law provides) for the entrepreneur–venture capitalist relationship, focusing, in particular, on unavoidable value-destroying trade sales. First, it demonstrates that the typical entrepreneur–venture capitalist contract does institutionalize the venture capitalist’s liquidity needs, allowing, under some circumstances, for counterintuitive instances of contractually-compliant value destruction. Unavoidable value-destroying
trade sales are the most tangible example. Next, it argues that fair value protections can prevent the entrepreneur and venture capitalist from allocating the value that these transactions generate as they would want. Then, it shows that the reality of venture capital-backed firms calls for a process of adaptation of the standard corporate contract that has one major step in the deactivation or re-shaping of fair value protections. Finally, it argues that a standard corporate contract aiming to promote social welfare through venture capital should feature flexible fair value protections
T3  - LawFin Working Paper - 1 
KW  - Private equity
KW  - Venture capital
KW  - Start-ups
KW  - Entrepreneurship
KW  - Innovation
KW  - Corporate governance
KW  - Private ordering
KW  - Drag-along rights
KW  - Trade sales
KW  - Corporate law
KW  - Fair value
KW  - Appraisal rights
KW  - Law and economics
KW  - Law and finance
Y1  - 2020
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/61641
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-616417
UR  - https://ssrn.com/abstract=3662441
IS  - 28 August 2020
EP  - 56
PB  - Center for Advanced Studies on the Foundations of Law and Finance, House of Finance, Goethe University
CY  - Frankfurt am Main
ER  -