The authors discuss how M&A is a critically important exit option for venture capitalists and the innovative firms that they fund.
Firms backed by venture capital (VC) play a crucial role in driving innovation in the U.S. economy. Mergers and acquisitions (M&A) involving VC-backed firms, most notably in the tech industry, have increasingly been scrutinized by regulators in recent years. When the proposed acquiror is an established incumbent, concerns over “killer acquisitions” have sometimes led to regulatory skepticism. However, M&A is a critically important exit option for venture capitalists and the innovative firms that they fund, especially in light of the current stressed capital markets environment.
In this article, authors Ravi Sinha, Brendan Rudolph, and Alex Vasaly discuss how any broad assumption that acquisitions of VC-backed startups by incumbent tech platform firms are per se anticompetitive could have a chilling effect on future innovation.
This article was originally published by ABA Antitrust Magazine in June 2023.