Life Sciences Outlook 2012 Dutch biotech companies ... - NautaDutilh

In each case, a decision will have to be taken as to what constitutes the best exit procedure for investors
at the relevant time. This will be determined by, among other things, the company’s ‘hotness’ and the field
of potential buyers, the need to realize the exit within a particular period, and the extent to which an IPO
would be a realistic option, for instance if a dual-track scenario is pursued.
It goes without saying that creating some competitive pressure usually enhances the seller’s bargaining
position, even if a clear preferred buyer has been identified (e.g. the strategic partner in an alliance or
equity investment). As we have seen in Chapter 3, when entering into such an alliance or investment a
biotech company should be careful to avoid giving so many rights to the strategic partner as to result in an
outsourcing of the decision on the exit procedure and the company’s destiny. Of course the company may
deliberately choose to do this in a particular situation and for the right price.
The form of the trade sale will ultimately depend on the company’s assets. A company with only a single
product will obviously be acquired in its entirety by a sale of 100% of the shares. However, if a company
has a broader portfolio, the relevant product may be separated into a new company, through a legal
demerger or asset sale. The shares in the new company are then sold to complete the transaction. Partially
for fiscal reasons, this is another regularly used transaction structure.
The end of the line for management
While management may be retained for a while after
a takeover to ensure a smooth transition or to deal
with regulators in finishing an approval process, a
takeover usually brings a swift end to management’s
involvement with their former enterprise. If they are
not laid off in order to cut costs, they usually leave of
their own volition as they find it difficult to cope with
the culture, hierarchy and decision-making process
typical of big corporations. Financial considerations
Figure 6. Do you consider an IPO to be a realistic option for
Dutch biotech companies in 2012?
Yes
No
Don’t know
10
15
aside, they can easily afford to leave. “Management
that have completed a successful takeover don’t
have to worry about their future careers. Their skills
and experience are in such high demand that, if they
want, they can start the very next day at another
biotech company.”
“An IPO? Can’t get it done!”
The IPO scores remarkably low as a preferred exit
route for biotechs (see Figure 6). This is despite
75
0% 10% 20% 30% 40% 50% 60% 70% 80%
Life Sciences Outlook 2012 Dutch biotech companies: from start-up to exit
Percentage of respondents
35