June 25, 2022

Volume XII, Number 176

Advertisement
Advertisement

June 24, 2022

Subscribe to Latest Legal News and Analysis

June 23, 2022

Subscribe to Latest Legal News and Analysis

June 22, 2022

Subscribe to Latest Legal News and Analysis
Advertisement

Band Together: Corporate and Cultural Convergence in Life Sciences M&A

Mintz, an Am Law 100 firm, and Mergermarket, a company providing intelligence, data, and analysis on global M&A deals, partnered to produce a comprehensive report on recent M&A activity in the life sciences. The report combines extensive data on life sciences mergers from 2015 through April 7, 2020 with the results of a survey of 100 US-based executives – CEOs, CFOs, and heads of M&A – to provide an in-depth review of industry deals, focusing on post-deal integration and critical factors influencing merger success. It also examines the steep first-quarter decline in M&A transactions in 2020 amid the coronavirus pandemic.

Insight on Deals & Post-Closing Challenges

Presenting detailed research on M&A deal activity in the US pharmaceuticals, medical device/diagnostics, and biotech sectors, the report features charts on:

  • yearly inbound, outbound, and domestic deal value
  • the 10 largest deals of 2019
  • life sciences deals and their value, by quarter, since 2015

It then presents the results of an in-depth survey of 100 US-based executives, who share anonymized information on their latest deals to provide insight on:

  • M&A transaction drivers
  • post-closing integration

Survey Respondents

Seventy percent of respondents surveyed had recently acquired or were acquired by a US company, while 30% acquired or were acquired by a non-US company. In the survey, 37% of respondents identified that they had transacted, in their most recent deal, with a pharmaceuticals company, 32% with a medical devices or diagnostics company, and 31% with a biotech company.

Comprehensive Feedback – With a Focus on Post-Deal Integration

Beginning with questions on the merger decision and its rationale, respondents assigned each possible contributing factor a score from 0 to 5, with 5 denoting the most significant contribution. Executives weighed on deal drivers, targets, and pricing – revealing that a high proportion of sellers obtained an acquisition price well in excess of their goal – and the consideration they gave to alternative transactions, such as IPOs and fallen angel mergers

They also provided insight on integration obstacles, identifying the challenge of advancing a product to a later clinical stage as the number one challenge, as well as other post-deal issues, such as leadership retention and the challenges of merging organizations with different cultures. In addition, they answered questions on how they measure success and the factors they consider critical to achieving a successful integration.

In a final survey section on lessons learned, respondents weighed factors that would improve integration, identifying integration planning as the area in greatest need of improvement.

Takeaways

The report concludes with a look forward to a changing M&A landscape as the world contends with the pandemic and its impacts. In the months ahead, the industry is likely to focus more attention on digital solutions in order to more effectively reach customers, employees, suppliers, and partners. While patent expiration is and will likely continue to be the primary driver of M&A deals, life sciences executives may increasingly explore deals that would improve their digital solutions.

Survey respondents clearly indicated that poor integration planning is the cause of many post-closing difficulties. The authors recommend that businesses expand their strategic focus on project advancement to also focus on employee and customer retention – addressing cultural factors at the due diligence stage and backing up their expanded strategy with clear goals, timelines, and metrics to determine how goals are being achieved. 

For additional life sciences M&A insights from 2020 activity, click here to access Mintz and Mergermarket’s report, “Band Together: Corporate and Cultural Convergence in Life Sciences M&A.”

©1994-2022 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.National Law Review, Volume X, Number 177
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

About this Author

Mintz creates breakthrough legal strategies that help clients solve problems and forge ahead. Our attorneys combine legal, business, and industry insight to help navigate shifting challenges. We help clients comply with evolving regulations and compete in emerging markets. While meeting their increasing financing needs, we can also assist with handling employment and labor issues. To compete tomorrow, you need the best business strategy now. We’ll help you make the next move.

617-542-6000
Advertisement
Advertisement
Advertisement