Spring 2013 issue of Horizons

LIFE SCIENCES LIFE SCIENCES

Tax Changes & Valuation Issues Unique to the Life Sciences Industry by Steve Hays, CPA & Leigh Ellebrecht

Valuation Issues Unique to Life Sciences Companies Companies in the life sciences industry require valuations for various reasons: transactions (raising investment funds, compensating employees, licensing intellectual property, etc.), tax purposes, financial reporting, or litigation purposes. Due to the innovative nature of the industry, there are many start-up life sciences companies that are focused on research and development but have not yet started generating positive cash flow. Generally

speaking, the earlier the stage of a company, the less useful traditional valuation methods will be. Valuation Overview There are three main approaches to valuing a company:

1. Income approach

2. Market approach

3. Asset approach

page 22 | horizons Spring 2013