Venture Capital and Private Equity Contracting: An International Perspective

Venture Capital and Private Equity Contracting: An International Perspective

Douglas J. Cumming, Sofia A. Johan

Language: English

Pages: 785

ISBN: B01K0RKMCI

Format: PDF / Kindle (mobi) / ePub


Other books present corporate finance approaches to the VC/PE industry, but many key decisions require an understanding of the ways that law and economics work together. This book is better than straight corporate finance textbooks because it offers broad perspectives and principles that enable readers to deduce the economic implications of specific contract terms. This approach avoids the common pitfalls of implying that contractual terms apply equally to firms in any industry anywhere in the world.

. Explores the economic implications of contract terms for start-up firms in various industries
. Pairs international data with explanations and examples about differences in VC and PE national and regional markets
. Contains sample contracts, including limited partnership agreements, term sheets, shareholder agreements, and subscription agreements
. Presents international datasets on limited partnership agreements between institutional investors and VC and PE funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and geographic focus. In Australia, there was approximately US$3 billion in capital under management across 174 funds in 2003.8 Many funds in Australia are quite small, as they are organized as pooled investment vehicles and not traditional limited partnership funds (Cumming, 2007; Cumming et al., 2005). There was comparatively little early-stage investment activity until 1997 when the Government of Australia established the Innovation Investment Fund (IIF) program, which effectively led the

Percentage of MBA/CFA- Percentage of principal fund managers with investment making trained fund managers decisions who have obtained an MBA or CFA qualifications. Where managers have some extent of such training, that fraction is also reflected in the data Percentage of principal fund managers with investment making Percentage of Ph.D. decisions who have obtained a Ph.D. in a science-based (science)-trained fund discipline. Where managers have some extent of formal managers scientific training,

financing Sale of fund interests by inv Fundraising restrictions Public disclosure restrictions Removal of fund manager FM liability limited (low returns) FM liability limited (low investment) FM liability limited (other) Figure 5.2 Frequency of use of each covenant. 20 25 30 35 40 45 50 160 Venture Capital and Private Equity Contracting 3. Fund manager characteristic (percentage of legally trained fund managers, MBA/CFAtrained fund managers, and Ph.D.(science/nonscience-based

number of covenants pertaining to fund operations (such as the sale of fund interests, restrictions on fundraising, and matters pertaining to public disclosure). An increase in the Legality index from 20 to 21 (a typical improvement among developed nations) increases the probability of an extra covenant pertaining to fund operation by approximately 1%, whereas an increase from 10 to 11 (a typical improvement among emerging markets) increases the probability of an extra covenant pertaining to fund

http://dx.doi.org/10.1016/B978-0-12-409537-3.00006-2 © 2014 Elsevier Inc. All rights reserved. 176 Venture Capital and Private Equity Contracting institutional conditions in which the funds operate, fund characteristics (such as the type of investments in terms of stage and industry focus), and market conditions. In this chapter we will: ● ● ● ● ● Study key terms in limited partnership compensation contracts; Consider different factors that influence the design of limited partnership

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