Bio Transplant Case

Part A - If he goes public:
What parts of the company will be affected?
The whole company and its culture would be affected.
Senior managers would have to communicate with the public about company’s vision.
Managers and staff might divert their attention to quarterly reports and stock price movements.
Public relations staff
Only about 40% would remain in control by insiders

How will his ability to operate be affected?
Disclosure might affect BioTransplant’s competitiveness.
It would require a lot of time to do the roadshow, to explain/communicate his vision to the shareholders and he won’t have as much time to do his day to day activities.

Part B - Argue why he shouldn’t do an IPO:
Costs:
Direct costs of an IPO:
Underwriting costs
Costs filing SEC, providing audited financial statements
Costs too much to conduct road trips to market the offering
Indirect costs of an IPO:
Costs associated with training and maintaining the public relations staff
Change in company’s culture
Disclosure
Management would have to pay attention to quarter reports instead of long-term objectives.
Management would have to spend time to explain the company’s vision to new shareholders who are unfamiliar with biotransplant business.
Other Reasons why shouldn’t do an IPO:
Still had enough cash in the short run
It would be hard to find a professional underwriter in biotechnology field.
It would be uncertain how much BioTransplant can raise due to DNX Corp incident. Many companies went public with similar pledges about xenotransplantation, but investors were let down in the end.
It would be hard to time “IPO windows” in biotechnology field.
BioTransplant’s closest competitor -- Alexion Pharmaceuticals Inc. were about to complete IPO process, and it would be hard for BioTransplant to compete with Alexion Pharmaceuticals Inc for public