We examine the eects of heterogeneous rm technological competence, and industry R&D uncertainty and costs on rm decisions of remaining private, going public and being acquired. Using a new R&D project development dataset for private rms in the drug industries, we show that the initial condition of technological competence interacting with product market conditions determines long-run growth outcomes of private rms. We nd that rms with low inherent competence are more likely to retain their growth options by remaining private, when facing high industry-level R&D uncertainty or costs. Firms with low competence but relatively matured R&D projects in their pipelines are more likely to be acquired and thus transfer their growth options to acquirers. Firms with high competence are more likely to go public. Using the Biologics Price Competition and Innovation Act (BPCIA) in 2010 as an exogenous shock to the R&D costs, we nd an increase in aected rms going public following the shock.