research
Merging information acquisition
Sector credibility
Clear recommendations
What'sNewS Issue 11November 1998 I I
For M&A, research forms a crucial element in this high
value added business. Clear steps have been taken
towards establishing lines of research. These are well
defined and clear cut. Existing expertise on various
markets and sectors shows where potential for business
eould be. M&A teams much keep abreast of
opportunities through a number of research approaches.
The first is maintaining information on and monitoring
current market and sector developments in countries
where M&A teams see potential. Following that, a clear
picture is established of the various companies which
have recently been operational within the chosen sector.
Last, hut not least, sector knowledge collected by various
M&A teams network-wide is
consulted. Much of the information
is gathered through external sources
and via various puhlicly held
information services, such as
databases like the Europe-based
Am-Data or Reuters and
Bloomberg. But according to
M&A's Hein Godschalx, much of
the information is also sourced internally. 'We are heavily
reliant on the network. Divisions such as the equity
research team, and especially F&A research we use a lot
- in fact, we really couldn't function without the in-house
knowledge of F&A research.'
Hein Godschalx
Dr Stephen McGarry, Dr Sam Fazeli, Hayley Southwood, Max Welby and Andrew Tivenan
The reason for approaching
the sector in this way is the
team's desire to avoid 'our
methodology being viewed as
a nice academie tooi, but not
in touch with reality,' says
the team's chief, Andrew
Tivanen. 'We are not
dogmatic in our approach
and have been bullish on
stocks on which we are now
bears, and vice versa. Our
philosophy 011 equity
research is that it should add
value. I know it sounds like a
cliché, but we mean it. We
want to give the cliënt what
he or she wants and not
what we think they want.'
Joanne McNeill of our
Edinburgh office is also a
seen customer and what she
wants is to learn more about
the industry. 'We have a
number of promising
prospects in Scotland,' she
explains. 'That is why this
has been so useful for me. If
you are going to see a cliënt,
and you claim to be
knowledge-driven, then you've
got to have at least some
insight into the sector. This
will give me a little more
health care credibility in a
cliënt base currently
dominated by F&A.'
'My clients often get excited
about it, especially when a
new product is launched. But
they don't go in for the long
term. When a bit of reality
sets in, everyone wants to sell.
So, I'm here to do some
orientation on what is going
on in the biotech sector and
to explore opportunities for
my clients.
Fxciting is a word used
fcequently to describe the
biotech sector, which Steve
McGarry says can also be
called 'biopharmaceutical'.
'Basically,' he says, 'both these
terms describe any company
which is developing drugs
using any biotechnology
process. The way we value
these companies is based on a
discounted cashflow. This is a
conservative methodology and
provides each company with a
stand-alone valuation.' This
valuation is published in the
Review along with
recommendations.
'Our recommendations on
companies reflect our risk-
adjusted valuations relative to
share prices at the time and
are based on our discounted
cashflow analysis,' Sam Fazeli
explains. 'We point out where
Joanna McNeill
we believe there are
discrepancies between our
valuations and those placed
on companies by the mar
ket, using conventional
valuation methods.'
The RaboBiotech Review will be
published twice a year.
