Despite the dedication of the management team and board to a company’s success, an often overlooked component is the dynamics of the segment in which the company operates. In an effort to demonstrate the importance of the external view and how segment dynamics are likely to significantly impact the reality of companies, we analyzed recent data in the three-year period between 2015 and 2017 pertaining to financing events, M&A transactions and initial public offerings (IPO) in three separate sectors: therapeutic devices, oncology therapeutics and antibiotics. The analysis presented will provide management with a good estimation as to the required capital to achieve value-add milestones as well as the anticipated return on investment. These examples demonstrate the fundamentally different dynamics of three sectors, which will impact the most probable path to liquidity of companies in those sectors. Therapeutic devices have to often get regulatory approval prior to an exit where exits happen earlier in clinical development for the oncology therapeutics sector. Despite the high unmet need, there have been limited exits in the antibiotics sector. In all cases, return on investment is greater when the company’s exit included being acquired versus an IPO. This data demonstrates that exit opportunities are largely sector-dependent and suggests substituting external formal thinking, market-driven evaluation and analysis for inward-looking and biased judgment will being beneficial crafting a mature business case as well increasing the probability of success.
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