For a Look at IPO Future, Follow the Follow-On?
This article was originally published in Start Up
Executive Summary
Three recent IPOs have stoked hopes that a broader IPO market may emerge. The market for follow-on public offerings though says more about a potential IPO resurgence than these recent debuts.
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Biotech Backers Learn To Live With Exit-By-Earn-Out
Even as both public investors and pharma companies more vigorously sniff out biopharma opportunities, exits for venture-backed firms remain scarce. Can risk-sharing acquisitions save the day?
Biotech Backers Learn To Live With Exit-By-Earn-Out
Even as both public investors and pharma companies more vigorously sniff out biopharma opportunities, exits for venture-backed firms remain scarce. Can risk-sharing acquisitions save the day?
Biotech Backers Are Learning to Live with Exit-by-Earn-out
Despite a few bright spots, the fundraising environment remains difficult for many venture investors. Biotechs that went public during the 2005-2007 window have largely underperformed, despite hitting the stock exchanges with what plenty of CEOs and VCs felt were artificially low prices negotiated by an oligarchy of biotech IPO buyers. Moreover, pharmaceutical companies have been buying fewer, not more, biotechs - even as more companies are seemingly created with acquisition, not IPO, in mind. Meanwhile, the M&A deals that do occur are increasingly risk-sharing affairs that resemble alliances, replete with earn-out payments triggered by development, regulatory, or commercial milestones. In short: good venture exits have been extremely hard to come by. And data from Elsevier's Strategic Transactions analyzed by START-UP suggest that although these risk-sharing deal structures may be a by-product of a miserable economy, they are likely to stick around regardless of any economic turnaround.