We’ve seen some major exits in the biotech market in 2017. Early in the year, in Switzerland alone, Actelion was sold to Johnson & Johnson while ObsEva made a successful IPO on NASDAQ. These were quickly followed by Boston Scientific’s acquisition of Symetis in May. The United States and other countries have seen similar levels of activity, so which factors contribute most significantly to maximise exit values?
So what are the key elements of a successful exit?
Typically one thinks of three factors – the science, the funding and the people. At The RSA Group, our focus is on the people, specifically the leadership. A strong investment in talent and building the right team will always be a solid investment in a successful exit for investors and a better future for the company. After all, a company’s success (or otherwise) is only as good as the talented people who manage the funds and drive innovation forward, so investing in the right talent reaps its own rewards.
A report from PWC said that “a company’s approach to talent is a core component of its overall strategy. Yet too often, we find a disconnect between how companies define their strategy and how they shape and invest in their workforce. This can be a costly mistake during the best times, let alone in today’s strained economic environment”.
Getting it right from the start
Of course, this starts with the incumbent team at the helm already. To steer the company towards a successful exit, you must be a good executive yourself, aware of the strengths and weaknesses of your team. Which talent do I need to maximize exit value? What are the risks and negative value of hiring the wrong person? A good management team will include the best talent for its specific needs and not only people “good enough” for the job.
Typically, Big Pharma experience is essential as pharma companies are usually the end clients (licence or company acquisition). Having a good understanding of their expectations is needed early in any project design phase and having big pharma experience will also build trust on their side.
At the same time, candidates should have an entrepreneurial spirit to be able to work in a start-up environment. They must have a personality compatible with the founders, usually scientists, who will still need to contribute, and they must understand how to produce medical and financial value out of science, communicating well with the medical and financial communities.
Founders usually consider science as the first-priority and early investors are cost savvy. However, this kind of thinking may lead to weak staffing decisions that will dramatically hamper the company’s future and return on investment. Investing in building the right team is the most important single factor.
Nick Stephens, Executive Chairman | Nick.Stephens@theRSAgroup.com