Replies to post #47263 on Biotech Values

[DewDiligence]

>…making a 19% equity investment or about 15M shares (keeping it below 20% to avoid arcane accounting rules of presumed 'significant influence', while still scaring off any other potential suitors)<

The reason many equity deals with pre-commercial biotech companies specify a 19.9% stake — rather than 20%+ — is not arcane. It is so the acquiring company does not have to recognize a pro rata share of the acquired company’s losses on its own income statement. Regards, Dew