How are the options to buy and sell a business relevant for entrepreneurs? Prospective entrepreneurs value the purchase of mature firms while incumbents want to recover both the tangible and intangible value of their businesses upon exit. We introduce a theory of entrepreneurial assets transfer consistent with empirical evidence and centered around a businesses for sale market that lets entrepreneurs trade the maturity components of their firms. We find that shutting that market down leads to a substantial drop in aggregate output and alters the pool of firms, incentives to enter and exit, and the wealth distribution.
Entrepreneurship, Business transfers, Maturity value, Intangible assets;
- E22: Capital • Investment • Capacity
- E23: Production
- D40: General
- J24: Human Capital • Skills • Occupational Choice • Labor Productivity
TSE Working Paper, n° 20-1078, février 2020, révision juin 2020