The market for control of science-based firms

This paper investigates the valuation and M&A dynamics of the population of 254 biotech firms that went public in Europe over the last two decades. Among these, we identify a high proportion (40%) of firms affiliated with a university or another public research organization. After controlling for intellectual capital and other possible determinants, we find that the affiliation with a university is recognized as beneficial by investors, enhances the probability of being targeted in subsequent M&A deals, in particular in cross-border deals. Our message is that IPOs and acquisitions by incumbent firms are mechanisms to complete the technology transfer process and to effectively exploit academic innovations.