Exit Decision of Venture Capital Based on Linear Contract in Continuous Time: IPO or M&A

Table 1

Numerical simulation for exit decision.

		1	2	3	4	5	6	7	8	9	10
		100.00	22.70	16.90	15.40	14.80	14.50	14.30	14.20	14.10	14.10
		0.00	4.44	16.69	34.34	57.00	84.62	117.21	154.77	197.31	244.84
		1.00	1.00	9.40	12.10	12.90	13.20	13.30	13.40	13.50	13.60
		19.08	19.70	26.45	43.54	66.73	95.11	128.41	166.58	209.63	257.56
	Overall decision	M&A	M&A	M&A	M&A	M&A	M&A	M&A	M&A	M&A	M&A
		100.00	28.10	18.70	16.30	15.40	14.90	14.60	14.40	14.30	14.20
		−0.01	2.63	12.99	29.55	51.56	78.77	111.10	148.48	190.89	238.33
		1.00	1.00	6.10	11.70	13.20	13.70	13.90	14.00	14.00	14.00
		19.05	19.40	21.66	33.88	53.34	78.81	109.89	146.37	188.12	235.05
	VC’s decision	M&A	M&A	M&A	M&A	M&A	M&A	IPO	IPO	IPO	IPO
		100.00	33.80	20.30	17.00	15.60	15.00	14.60	14.40	14.30	14.20
		−0.01	1.97	11.84	28.98	52.01	80.26	113.49	151.62	194.64	242.56
		1.00	1.00	1.00	11.40	13.90	14.50	14.60	14.50	14.30	14.20
		19.04	19.24	20.01	28.63	46.93	72.63	104.95	143.30	187.24	236.47
	Overall decision	M&A	M&A	M&A	IPO	IPO	IPO	IPO	IPO	IPO	IPO
		100.00	46.70	24.50	19.20	17.10	16.10	15.50	15.10	14.90	14.70
		−0.02	0.78	6.86	19.86	39.24	64.55	95.50	131.86	173.52	220.39
		1.00	1.00	1.00	6.70	12.70	14.60	15.20	15.30	15.20	15.10
		19.03	19.14	19.55	21.77	32.58	50.36	74.52	104.89	141.36	183.78
	VC’s decision	M&A	M&A	M&A	M&A	IPO	IPO	IPO	IPO	IPO	IPO
		100.00	54.60	27.80	20.80	18.10	16.70	15.80	15.30	14.90	14.70
		−0.03	0.59	5.73	18.28	38.19	64.92	97.84	136.43	180.32	229.29
		1.00	1.00	1.00	2.60	12.00	15.10	16.10	16.20	16.10	15.90
		19.03	19.10	19.39	20.20	28.03	43.85	66.84	96.99	134.26	178.47
	Overall decision	M&A	M&A	M&A	M&A	IPO	IPO	IPO	IPO	IPO	IPO
		100.00	73.00	36.50	24.70	20.50	18.50	17.40	16.60	16.10	15.70
		−0.04	0.20	2.57	10.03	23.49	43.18	69.11	101.17	139.19	183.01
		1.00	1.00	1.00	1.00	5.60	12.50	15.30	16.40	16.70	16.70
		19.03	19.06	19.21	19.60	21.04	28.91	42.59	61.80	86.75	117.64
	VC’s decision	M&A	M&A	M&A	M&A	IPO	IPO	IPO	IPO	IPO	IPO
		100.00	66.90	33.70	23.60	19.90	18.00	16.90	16.10	15.60	15.20
		−0.04	0.32	3.57	13.03	29.63	53.46	84.22	121.46	164.71	213.61
		1.00	1.00	1.00	1.00	8.30	14.10	16.20	16.90	17.00	16.90
		19.03	19.07	19.25	19.72	22.57	33.15	50.31	74.09	104.77	142.52
	Overall decision	M&A	M&A	M&A	M&A	IPO	IPO	IPO	IPO	IPO	IPO
		100.00	85.80	45.60	29.00	23.00	20.30	18.70	17.70	17.00	16.50
		−0.05	0.11	1.45	6.49	16.67	32.57	54.53	82.67	117.01	157.44
		1.00	1.00	1.00	1.00	1.00	8.90	13.90	16.10	17.00	17.40
		19.03	19.05	19.14	19.38	19.87	22.99	31.94	45.77	64.58	88.65
	VC’s decision	M&A	M&A	M&A	M&A	M&A	IPO	IPO	IPO	IPO	IPO