A Compound Model for Venture Capital Exit Decision-making
Wang Xuan · Systems Engineering - Theory & Practice · 2005
Contraposing multi-stage venture investment projects with asymmetric information and uncertain return, considering venture capitalists' investment strategies, and using incomplete information static game theory and dynamic programming method, this paper develops a compound model on exit decision to maximize utility of venture capitalists investing in debt and equity. The model properly allots the proportion between debt and equity, effectively demonstrates the choice of venture capitalists in determination of exit time and exit manner, and can be the operation gist for venture capitalists to make exit decision.