With the number of IPO's declining over the past few years, some biotech company founders are opting for reverse mergers as an alternative way to help finance their company.
Jennifer Boggs of BioWorld recently wrote about Couger Biotechnology, which engineered one of the most successful reverse mergers in years. Founder Alan Auerback opted for a special purpose acquisition company (SPAC). Auerback stated that the use of a shell company allowed shareholders of Cougar hold 100 percent of the combined firm and avoided the "legacy investors."
Reverse mergers are often used to finance working capital needs. The downside is that they are expensive. In addition, there's no ramp up. "There's no "coming out party, like with an IPO, with underwriters helping to build enthusiasm for the newly listed stock," Auerbach said. "You kind of have to build momentum on your own." At this point, having a well-planned marketing strategy is essential for success.
No comments:
Post a Comment