Enablers of exit through trade sale: the case of early-stage research-based spin-offs

Abstract

A significant share of new technology-based ventures exit through trade sale at an early stage of firm development. While trade sale is an important exit route for entrepreneurs and investors, and a potential source of new innovations and technology for acquiring firms, we have limited knowledge about the factors that help to effectively achieve a trade sale. We employ a unique dataset tracking the population of research-based spin-offs in Norway and conduct in-depth case studies of nine trade sales. Building on 52 interviews and other secondary data, we inductively develop propositions outlining three dimensions that lead to a successful trade sale—potential synergies, credible alternatives, and uncertainty reduction. We show that these enablers of trade sales are not only linked to the focal venture but also related to the idiosyncratic dyad with the buyer, reflecting both the potential for and likelihood of trade sale. Consequently, our study contributes to the literatures on entrepreneurial exit and academic entrepreneurship by mapping the important but under-explored area of trade sale as an exit mode.