Control Rights Competition Between Venture Shareholders And Institutional Investors

In recent years, with the frequent occurrence of control rights competition and the deepening understanding of the control rights, researches on control right competition has been paid more and more attention in the theoretical and practical circles.This article selects NVC event as a case to do the research of the above issues. As a listed company, it was high-profiled because experienced a long battle for the right of control which made the issue publicly and typically, providing rich information for the study of competition for control rights between venture shareholders and institutional investors. This article delves into the reasons and motivations of the competition for control rights of NVC and compares the corporate performance difference forward and backward the battle, hoping to provide the experiences and lessons for the private enterprise to avoid similar problems.This article observes the external environment of enterprises, and establishes the analytical framework of control right competition between the private enterprise founding shareholders and institutional investors using principal-agent theory based on the literature reviews and theoretical researches. With case analysis, trend analysis, comparative analysis and ratio analysis ect., methods, this article analyses the NVC event and draws conclusions:the control rights competitions rooted in financing restriction of private enterprises; the real motivation of the rights battle is the principal-agent problem due to conflicts of interest; the effects of other stakeholders in the process of control rights competition cannot be ignored and the final result of NVC event is not good for the stable development of the company.To avoid the friction between founders of the private enterprises and institutional investors, the founders should arrange the plans of financing reasonablly, choose the right investors, pay attention to control rights while negotiating with institutional investors and standardize the corporate governance. For the aspect of institutional investors, they should focus on the irreplaceability of the founder, while looking for the right professional managers. At the same time, the establishment of venture shareholders’ control protection system and the introduction of dual-share structure is a kind of beneficial attempt.