The contract research organisation (CRO) believes that by suspending its duty to file periodic reports it can achieve significant savings and that currently it is incurring “the expenses of being a public company without realising the benefits”.
James McGuire, chairman of the board, explained that ”the increasing cost and time associated with public company regulatory compliance required a significant amount of expense and management resources with no tangible benefit to our shareholders”.
Like many of its peers Averion has seen its revenues fall, with second quarter sales down 15 per cent, and has now opted to cut its outgoings by becoming private. The company managed to reduce its total operating expenses by 15 per cent in the second quarter and going private should help continue this trend.
Furthermore, going private means that Averion eliminates its obligation to “publicly disclose sensitive, competitive business information”, according to its filing with the US Securities and Exchange Commission (SEC).
Averion believes that the benefits outweigh the negatives. These downsides include it being more difficult to use shares to acquire other companies and more challenging to access public equity markets.
Averion evaluated two other strategic alternatives before deciding that becoming a private company was in the best interests of shareholders and the business.
Firstly, the CRO discussed entering into a merger and hired Edgemont Advisors to help pursue this. After a significant marketing effort Edgemont identified one candidate for a merger.
Preliminary discussions were held with the other company but no formal offer was received. Averion also considered taking no action but decided that this would be detrimental to all stakeholders.
The company’s SEC filing can be found here.