Financial Intermediary Relationships and Public Market Access

Established relationships between venture capital firms and investment-bank underwriters materially affect IPO access and venture-capital performance.

• The study uses underwriter mergers and closures as plausibly external disruptions and applies a difference-in-differences design to compare affected VC firms with firms retaining their relationships.
• Losing an established underwriter relationship reduces VC IPO exits by approximately 9.5%.
• The disruption also reduces venture-capital fund multiples by approximately 7.8%, linking intermediary relationships directly to realized investment performance.
• The effect is strongest for smaller VC firms and funds nearing the end of their investment lives, which have fewer alternatives and less time to rebuild relationships.
• Evidence from underwriter mergers indicates that employee turnover makes disruptions more damaging, while underwriters participate as deal facilitators or late-stage investors in approximately 15% of cases.

Takeaway: Investors evaluating private-market managers should assess underwriting networks, intermediary concentration, IPO execution experience, fund maturity, and the continuity of the people who maintain key relationships.