CEU Electronic Theses and Dissertations, 2020
| Author | Horvath, Agnes |
|---|---|
| Title | EXIT STRATEGIES FOR VENTURE CAPITAL IN HUNGARY - in Light of Experiences from the United States of America |
| Summary | The paper presents the most important exit strategies employed by the Venture Capital (hereinafter: VC) investment fund managers in Hungary and the United States of America (hereinafter: US). The key proposition the thesis aims to show is, first, that the presently prevailing sales-based exit strategies in Hungary will continue to produce only modest results and might have negative benefits for the investee and the venture capitalist. Secondly, as the US experiences suggest, more efforts should be invested into the amelioration of the regulatory environment that would make IPO-s more trusted and favored to participants on the VC market. The paper is based on legal literature as well as data provided by the relevant Venture Capital Associations, especially regarding significant IPO-s or sales of startups. The paper views the presented issues mainly from the point of view of the venture capitalist, but the perspective of the investee firm is also taken into consideration during the research. The focus of the paper is on the Hungarian jurisdiction, which is contrasted to the approach to exits reflected in the US. In order to provide a beneficial recommendation for the Hungarian VC investment fund managers I will review the main characteristics of VC funds in Hungary. I will present the most frequently resorted to exit methods and the concomitant exit rights of the investee company’s shareholders, the tag-along, drag-along, lock-up and buy-back provisions or clauses that can aid the VC manager in structuring the exit of the investment. The paper will tackle the practical advantageous results of the IPO and less advantageous outcomes of the sale, with a special focus on the sale to management. The IPO is a more rewarding avenue, while the sale provides a safer return on the investment of the investors but might lead to drawbacks for the investee and the venture capital experts, too. I argue for a more favorable, active and trustful approach to IPO-s, against the excessive reliance on sales to management. |
| Supervisor | Tajti Tibor |
| Department | Legal Studies LLM |
| Full text | https://www.etd.ceu.edu/2020/horvath_agnes.pdf |
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