Who's driving the liquidity event?

In a hard-hitting expert view piece, Dr Oded Ben-Joseph and Dr Shawn Manning, from investment bank Outcome Capital, advise on how life science companies can achieve shareholder objectives without falling into some common traps.

The principal purpose of all commercial ventures is to deliver shareholder return. Among listed companies, this is typically manifested by an increase in equity value, driven by positive news flow, value accretive transactions (particularly acquisitions at a share price premium) or dividend payments. While listed life science companies conform to this established model, for private mid-market life science companies with an investor base typically consisting of private equity, venture capital, corporate venture and management, a liquidity event in the form of an initial public offering (IPO) or value accretive acquisition is the most common route to shareholder return.

Timely achievement of a liquidity event should therefore represent the key objective of all small to mid-market life science companies. Commercial progress, in the form of data generation supporting product progression through to market, and auxiliary events that lend support to this process (ie collaborations, changes in the competitive environment and regulatory progression and/or acceleration) are the key drivers towards achieving these outcomes.