Gerri Henwood might not have used every possible way to take a company public, but she's tried quite a few. Today the President and CEO of Baudax Bio, she founded Recro Pharma Inc., Auxilium Pharmaceuticals Inc., and IBAH Inc., all of which went public.
"The entrepreneurial bug is to figure out what's the way that will work best for shareholders, for stakeholders in the business, and forward the cause of the business at the same time," Henwood says. "They differ by financing circumstances, by stage of product, those kinds of things"
A public company, for example, is a very controlled environment, particularly because of reporting.
"Everything's public," she says. "Your compensation and that of your management team — who got how much in bonus last year, all the kinds of things that can generate controversy in businesses."
However, being public means that you're able to consider opportunities that you might not have been able to consider if you were purely self-funded or if you were venture-backed or PE-backed.
Having had opportunities in each of those early-stage circumstances, she says it's a delight when you have a great VC team that you're working with and they understand the business and they have rational expectations.
"That can be a very good feeling, but they may not desire the growth that could be an opportunity for the product and for the company and for all shareholders, not just the VC shareholders or the PE shareholders," she says.
A public company might have those benefits compared to the early-stage funders, but she says public companies also have the burdens of market cycle.
"Some investors who have experience in life science have exited the space and, for a period of time, you're dealing with retail investors who are good people, work hard for their money and have reasonable expectations of return, but may not really understand the time frames that are involved when you're dealing with pharma products and the development cycle on the FDA and things like that," she says.
Henwood says being publicly funded gives a company the freedom to operate and stay alive in times that could be very difficult for those that are privately funded.
"If we got approval right before COVID and we were not public, it would have been very difficult to resist our owners at the time if they were VCs from selling us for a song to somebody else," she says. "And we do think there's an opportunity to create very meaningful value for shareholders, so it's good to have an opportunity to get that to happen."
For those entrepreneurs who are thinking about going public, Henwood says look at the comps.
"Who are companies that are a little bit like you or were like you within a couple of years? What path did they take? What kinds of valuations did they get? What financing routes did they take going to that?" Henwood says. "That's often a little bit of a template against which you will be judged, and so being ready and familiar with those will help you to be more credible to the marketplace."
Henwood spoke at last year's Philadelphia Smart Business Dealmakers Conference about her entrepreneurial experience as well as the differences — the pros and cons — of public and private funding. Hit play on the video above to catch the full conversation.