Case Study – Mergers & Acquisitions
Mar 23, 2018
Nordic-MUbio purchase of BioLogo
One of the most critical steps in completing an Acquisition is to find a willing seller for an interested buyer. Companies can spend so much time organizing themselves for sale yet never find a buyer where all the ‘stars align’.
Nordic-MUbio (NM) has been well known over the past few years to acquire specific capability rather than build it. In other words, they are looking for particular assets which compliment what they already have and enhance it, allowing NM to enter new markets or geographies. This was the case with the purchase of USA based Exalpha Biologicals in 2017 which allowed the company to significantly scale across the USA.
Within the broad M&A space there are companies that help you sell and companies that help you buy. NM had already contracted Pivotal Scientific Limited (PSL) to operate on the buy side. They were clear in their aspirations and explicit in their plans:
Pivotal Scientific were instructed to search for:
- Companies that offer Antibodies or closely related Research Reagents.
- Companies that sell primarily into the Research Market
- Companies that had a strong reputation and existing sales history.
The process – Identification
In any buy-side process, the starting point is clear guidelines from the client.
The second is to develop a broad target list of potential companies – This process can take days and months to complete. This is especially true when all the data you have to work with is public data.
The advantage that NM have with using Pivotal Scientific is our existing and comprehensive database of companies that consists of:
- Companies known for wanting to sell
- Companies that may wish to sell
- Companies wanting to dispose of specific assets
- Distressed assets
- This is across the industry and across all geographies
One of the most important elements of the deal, of any deal, is trust and therefore, NM were clear in their final request …. Companies that knew Pivotal Scientific and NM and already had some trust based on previous engagements.
The process – Engagement
A large majority of deals are done because a potential buyer simply makes contact with the target and discusses the potential for sale.
This was the starting point of engagement with BioLogo. A phone call….
A phone call led into the normal pre-LOI (Letter of intent) which contains the following; data collection, data about sales, data about EBITDA (profit), data about the company to help NM decide if it wanted to proceed.
The key learning about any engagement is always make it fact based…don’t cover up issues or problems as they will normally always be found out. The primary reason why deals fail is during Due Diligence when buyers uncover much more than they expected. This was not the case with BioLogo.
Making deals stick
BioLogo has been operating for over 20 years and the decision to sell was during the engagement process.
Deals succeed because buyer and seller have a common interest. This was evident with this deal:
- Do the deal at an agreed price
- Operate at speed
- Acquire assets not equity
- Agree on a clear integration plan
Price is not always the main reason why a deal fails. The key, in this case, was as much effort on both sides was placed on how to make the deal work as it was on how much would be paid.
As both parties operated at speed and made the sales contract simple with joint responsibility for ensuring it is implemented both sides achieves a Win:Win.
A good deal, at the right price with the right plan.
All supported by Pivotal Scientific- The value
Deals work when there is a willing seller, a fair buyer and a good process well managed…. that’s how deals are done.