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Advice You - Selling Your Business - Prepare for the Buyer Visit
In our mergers and acquisitions we practice a very important event prior to receiving letters of intent; the buyer visit. Don't be fooled into thinking that this is a simple headquarters tour. Experienced buyers know just the right questions to ask to uncover risks and to
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
discover opportunities. We try to coach our sellers on how to present and how to answer these carefully scripted questions.
Unfortunately, a man or a woman that has called their own shots for the last 25 years is not always receptive to coaching. If we get a feeling tha
Unfortunately, a man or a woman that has called their own shots for the last 25 years is not always receptive to coaching. If we get a feeling tha
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
our advice is falling on deaf ears, we schedule the first visit with a buyer that is not the top candidate. Once our seller has made a few tactical errors in this dry run, they are then open to some coaching.
This is what we tell them. Acquiring another company is very
This is what we tell them. Acquiring another company is very
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
isky. Mistakes can damage the buying company. Therefore, a buyer is looking to identify and mitigate risks. Their questioning will focus on what they can expect once they are the owner of your business. Are you bailing on a business that is on a downward spiral? When you
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
eave, will major customers leave with you? Will your key employees stay? Will our company have your strong support in transitioning your knowledge and intellectual capital to our staff?
The number one question is, why are you selling your business? The unacceptable answ
The number one question is, why are you selling your business? The unacceptable answ
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
r is, so I can get away as quickly as possible and sip umbrella drinks on an island. The correct positioning of your exit is, we have built this business and are nearing retirement. In order to realize the future potential we will have to invest back into it at a time whe
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
n we should be diversifying our assets. A strategic larger company could leverage our assets to achieve much greater market penetration than we could.
Another important theme is that you are in control. You understand your costs and your margins. You can identify the opp
Another important theme is that you are in control. You understand your costs and your margins. You can identify the opp
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
rtunities for growth that a better capitalized company could capture. You can articulate your strengths. You know your weaknesses and they are simply that you do not have enough resources, capital, or distribution to capitalize on all this potential you have created. You
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
nderstand your market and your competition.
Buyers like to believe they are buying a business at a discount. You should try to present your weaknesses in such a way that the buyer will think, we can easily correct that. For example, an eight week order backlog could be c
Buyers like to believe they are buying a business at a discount. You should try to present your weaknesses in such a way that the buyer will think, we can easily correct that. For example, an eight week order backlog could be c
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
nsidered a negative. A smart buyer will think, that is a high class problem. I wonder how many orders they lose because of the order delay? We could hire three more people, open two more work bays and cut that backlog down to ten days, immediately capturing 10% greater sa
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
es.
Another example is that the selling company is technology focused and really lacks sales and marketing expertise. The savvy buyer with a fully developed sales and marketing engine pictures a 20% increase in sales immediately. If the selling company already had these
Another example is that the selling company is technology focused and really lacks sales and marketing expertise. The savvy buyer with a fully developed sales and marketing engine pictures a 20% increase in sales immediately. If the selling company already had these
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
weaknesses corrected, the buyer would certainly have to reflect that in the purchase price. Because the weaknesses exist and the buyer has already identified how his company will correct them, he views it as buying potential at a discount.
A corporate visit should be a g
A corporate visit should be a g
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
od two-way exchange of information. The seller should ask such things as: How long have you been in business? How many locations do you have? How many employees work for your company? This question is a good way to back into company revenues by applying industry metrics o
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
revenue per employee. Sometimes private companies are hesitant to reveal sales figures. The seller wants to determine whether the buyer is big enough to make the acquisition.
What are your biggest challenges? Who are your biggest competitors? How do you see the market?
What are your biggest challenges? Who are your biggest competitors? How do you see the market?
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
here are your best opportunities? Have you made any prior acquisitions? How do you feel about them? What are you really good at? What areas would you like to improve? How would you see integrating our company with yours?
There is some very important information that you
There is some very important information that you
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
re seeking from this line of questioning. First, their answers give you some hooks on which to hang the assets of your company in order to drive up your perceived value to the buyer. Find their opportunities and show how your company combined with theirs can help capture
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
them. Show how your assets will give them an advantage over their competitors. Show how your combined assets can eliminate some of their problems or weaknesses.
You want to determine if there is a cultural and a philosophical fit. Is there trust? Do you feel comfortable?
You want to determine if there is a cultural and a philosophical fit. Is there trust? Do you feel comfortable?
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
Do they "get it" in terms of recognizing your company's strategic value or are they just trying to buy your company at some rule of thumb financial multiple?
Often a company acquisition is comprised of cash at close and some form of deferred transaction value like an ear
Often a company acquisition is comprised of cash at close and some form of deferred transaction value like an ear
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
out. If your deal was structured like this, do you have confidence that you would reach your maximum in future payments? Have they been able to articulate their growth plan after they acquire you?
As you can see, the buyer visit should not be looked at as simply a show
As you can see, the buyer visit should not be looked at as simply a show
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
nd tell corporate visit. It should be viewed as an opportunity for the seller to gather valuable information that will help him answer three questions: 1. Is it a fit? 2. How can my company help them grow and better compete? 3. Are they willing and able to pay me for that
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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