It’s never too early to start planning to sell the company. In fact, before even starting a company you need to visualize how this venture will end. After all, this is the outcome your angels and venture capitalists are waiting for. And they will have strong opinions about when you should sell.
When that time comes, you may be delighted that your company will be sold. However, you should consider the ramifications to your career. You may have invested most of your career in obtaining expertise in a single life science area. After you sell, what rights will you have to participate in this field? Will you continue to be able to expand your knowledge? Will you be able to utilize your expertise? These are essential components of any sales agreement, and it is important that you are comfortable with the outcome.
Regarding the actual sale of the company, typically there are multiple options for obtaining value from the company post-funding cycles. However, for life science companies there are typically very few options. Almost certainly you will seek a strategic sale to a pharmaceutical company. The capitalization requirements and complexity of marketing a novel pharmaceutical or device most rule out an IPO. And without that expertise, obtaining revenue to entice a walking harvest (ongoing payment based on sales) or partial sale are unlikely. Nor is a financial sale to non-life science company likely.
Further, few purchasers can obtain the full value of your vision. On the other hand, large life science corporations are counting on companies such as yours to identify new opportunities, so if the trials go well, you have a valuable product to sell. Of course, there is a chance that trials go poorly and the value of company plummets. Be prepared for the reality that the end result of your venture is Chapter 7, full dissolution of all assets. Not a pretty outcome, but highly likely in a life science venture.
To prepare for eventually selling your company, your goal is to find angels. More importantly, venture capitalists with expertise in this domain are a good end goal since the skills required to sell a company are likely far outside your skill set. Look to investors to obtain expertise and negotiate a favorable sale of the company. Regarding the value obtained, keep in mind that timing a sale is not an exact science. You are going to feel like you either waited too long to sell or have sold too early. You are not seeking the perfect solution, but a solution which meets your financial and developmental needs and goals. Good luck with your planning and good luck with your future venture.