To what extent the valuation method and the underwriter discount can influence the valuation of a startup in biotechnology and pharmaceutical industry during its IPO ?
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- This master's thesis presents an empirical study on the value creation during the IPO employed for startups operating in the biotech and pharmaceutical sectors. The primary objective is to determine the impact of the value-discounting method and of the underwriter's financial independence on the fair price of these companies' shares when they are first floated on the stock market. Through an in-depth analysis of recent IPOs of start-ups in the pharmaceutical and biotech sectors, this paper explores the potential effect of the above-mentioned two points on share prices one year after the IPO. By employing a 2-methods approach, the research combines both quantitative and machine learning approaches to gain an overview of the various interactions that all these factors may have. The results of this work highlight a significant relationship between the selection of the valuation method and the share price after one year. Furthermore, the study also reveals that in our case, the underwriter discount has no correlation with whether or not the share price increases after one year. In a nutshell, this master’s thesis makes a contribution to our understanding of the valuation process and its implications for the market price of these young small companies.