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Going Public: Small and Medium Sized Biotechnology Companies in European Markets

: Menrad, K.

Journal of commercial biotechnology 7 (2000), Nr.1, Special Issue on Financing, S.38-45
ISSN: 1462-8732
Fraunhofer ISI ()
biotechnology; stock exchange

How small medium-sized enterprises(SMEs) go public is analysed in the main European markets (United Kingdom, France, Germany). The stocks of biotechnology companies are characterised by extreme fluctuations in stock prices that influence to a high degree the possibilities of SMEs to aquire capital. The investors in biotechnology companies concentrate their investments in relatively 'mature' companies with products in late stages of product development and a market capitalisation of at least E 100m. The IPO of a biotechnology company represents a complex project with interactions with the stock exchange, investment banks or brokers, different advisers and other institutions. When selecting the relevant stock exchange for going public, a biotechnology company should first check the possibilities of the domestic market. In most investment banks the valuation of a biotechnology company consists of a fundamental analysis and the subsequent pricing of the company. The quantitative models used for this purpose include various uncertainties and subjective estimations, especially in cases of early stage of technology platform companies. The costs of going public account for at least 10 per cent of the volume of the issue.