The Impact of Mergers and Acquisitions on R&D Innovation and Productivity - Dr Daniel L. Mooradian,...
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Transcript of The Impact of Mergers and Acquisitions on R&D Innovation and Productivity - Dr Daniel L. Mooradian,...
![Page 1: The Impact of Mergers and Acquisitions on R&D Innovation and Productivity - Dr Daniel L. Mooradian, Innova Medical Design, LLC](https://reader034.fdocuments.net/reader034/viewer/2022051817/5481ed2eb4af9f960d8b465f/html5/thumbnails/1.jpg)
Impact of M&A Activity on R&D Productivity & Innovation
Daniel L. Mooradian, Ph.D. Chief Scientific Officer
Innova Medical Design LLC
Marcus Evans Medical Device Summit 2012 Colorado Springs, CO
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Copyright © 2012 Daniel L. Mooradian. All Rights reserved
Objectives
• Mechanics of Deal making
• Discuss trends in Medical Device M&A
• Explore the Challenges facing R&D
• Share my experiences (R&D centric) as a “survivor” and student of the subject
• Invite you to share your experiences!
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Copyright © 2012 Daniel L. Mooradian. All Rights reserved
Introduction
• Mergers & Acquisitions are a necessary and beneficial part of the corporate “life-cycle”
• Small companies - often the preferred strategy to create investor value
• Mid-/Large-Companies - a path to growth via optimization of new or existing sales channels
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Copyright © 2012 Daniel L. Mooradian. All Rights reserved
Source: www.fiercemedicaldevices.com
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Copyright © 2012 Daniel L. Mooradian. All Rights reserved
Medical Device M&A Trends
• Strong M&A activity in the Medical Device and Biotech sector through Q2 of 2012
• Modest activity Q3-Q4 2012 based on uncertainty regarding the election outcome, healthcare reform, etc.
• Marketplace seems poised for resurgence in 2013
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Copyright © 2012 Daniel L. Mooradian. All Rights reserved
Medical Device M&A Trends
• Significant capital on the side-lines – even VCs claim to be eager to invest!
• Trend in large companies away from organic R&D
• Trend in start-ups toward strategic partnership vs. traditional VC route for start-ups
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Copyright © 2012 Daniel L. Mooradian. All Rights reserved
The M&A Process
R&D INVOLVEMENT LOW LOW-MEDIUM HIGH
xeon-international.com/services/corporate-finance/ma/the-ma-process
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Copyright © 2012 Daniel L. Mooradian. All Rights reserved
![Page 9: The Impact of Mergers and Acquisitions on R&D Innovation and Productivity - Dr Daniel L. Mooradian, Innova Medical Design, LLC](https://reader034.fdocuments.net/reader034/viewer/2022051817/5481ed2eb4af9f960d8b465f/html5/thumbnails/9.jpg)
Copyright © 2012 Daniel L. Mooradian. All Rights reserved
![Page 10: The Impact of Mergers and Acquisitions on R&D Innovation and Productivity - Dr Daniel L. Mooradian, Innova Medical Design, LLC](https://reader034.fdocuments.net/reader034/viewer/2022051817/5481ed2eb4af9f960d8b465f/html5/thumbnails/10.jpg)
Copyright © 2012 Daniel L. Mooradian. All Rights reserved
M&A Challenges
• Mandatory adoption of cumbersome processes can strain resources
• Reorganization - loss of key management, changes in reporting can impact morale
• Shift in priorities by OPS, Quality, M&S can reduce availability to support product development leading to delay
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Copyright © 2012 Daniel L. Mooradian. All Rights reserved
Pipeline Value/Technology
• Often an attractive “sweetener” during due diligence.
• The acquired may believe that they will have a new source of support for innovation
• Not the Norm. Cost of acquisition (which comes at the expense of existing businesses) makes it difficult to “double down” before the value of the acquisition itself has been confirmed!
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Copyright © 2012 Daniel L. Mooradian. All Rights reserved
Strategies to improve R&D integration
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Copyright © 2012 Daniel L. Mooradian. All Rights reserved
• Make sure you are represented on the Integration team
• Engage your functional counter-part
• Realize that everyone involved has a “day job”
• Seek opportunities for your Senior staff to participate in key integration activities
• Make integration a priority
Integration Team
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Copyright © 2012 Daniel L. Mooradian. All Rights reserved
Process Knowledge
• What is your new Innovations Process?
• What is your new company’s Budget Process?
• Who are the key decision-makers?
• Are you adequately represented?
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Copyright © 2012 Daniel L. Mooradian. All Rights reserved
The “Deal Model”
• Make sure you understand what constraints have been placed on your current and future budgets as part of the acquirers “deal model”
• If growth in R&D is not built into the deal model then it will be very difficult to grow post-acquisition.
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Copyright © 2012 Daniel L. Mooradian. All Rights reserved
Next Years Budget
• You new organization is already working on next years budget!
• You are already at a disadvantage
• Learn how budget decisions are made……
• And who makes them!
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Copyright © 2012 Daniel L. Mooradian. All Rights reserved
Protect Resources
• The deal-model will set limits on unit expenditures post-acquisition
• If your needs are not reflected in the deal-model then you are at a disadvantage
• Pressure on OPS/Manufacturing/Quality (and Clinical) will put existing and future R&D resources at risk
• You must fight for position or risk decline
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Copyright © 2012 Daniel L. Mooradian. All Rights reserved
Protect Resources
• Critical R&D employees who are not protected by CIC agreements must be identified and protected via retention agreements if possible
• Protect against flight
• Promote engagement
• Reduce uncertainty and anxiety
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Copyright © 2012 Daniel L. Mooradian. All Rights reserved
Preserve Corporate Culture
• The post-acquisition period is one in which culture can play a critical role in guiding behavior in the face of uncertainty
• Too little emphasis is placed on the integration/assimilation of culture in mergers & acquisitions
• Repeat your core values often to yourself and others.
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Copyright © 2012 Daniel L. Mooradian. All Rights reserved
Communicate!
New Management Peers
Staff
No news is NOT good news!
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Copyright © 2012 Daniel L. Mooradian. All Rights reserved
Thank you!