Exit Choice of Innovative Companies

Purpose: identify and analyze the crucial factors and their influence on the exit strategies of the innovative firms. Design: three models were built with the ordered logit regression. The first model predicts the probability of successful exit (as M&A) compared with unsuccessful exit (as liquidation) for innovative firms depending from the selected determinants. The second model is similar to the previous one, but in this case, the successful exit is IPO. The third model predicts the probability of exit through the IPO compared with the M&A-deal for the innovative firm. The selection process of innovative companies contains three levels, based on the country, the industry and the firm characteristics. Findings: the built models predict that innovative firms with a higher level of innovation output are more likely to have successful exits. The determinants of the exit decisions of the innovative firms are: age, size, profitability, leverage, the presence of venture capitalist into the ownership structure, advertising and R&D expenditures, intangible assets, goodwill, rate of the inflation, the gross national income, the foreign direct investments and the GDP. As a specific feature of innovative companies, we underline the importance of innovation output, the presence of the venture capitalist into the ownership structure and economic openness. Practical implications: defined characteristics intrinsic to each exit strategy is a guide helping to check the firm’s suitability for the certain exit strategy or to evaluate the state of affairs and adjust the way of the firm's development to increase the probability of successful exit. Originality: this study provides an empirical evidence on the drivers of the successful exits for the innovative modern firms in the established innovative environment. We demonstrate that innovative firms especially sensitive to the macroeconomic conditions and the market product competition.