Exit Strategy for Emerging Technologies - Working with the The Big "S"
May 15, 2017
If you are seeking a possible exit with a “Big S” (Fortune 500 Multi-National Company “MNC”), there are some key factors for you to consider which may vary slightly from an exit for a P.E. or for IPO.
For example, the “team” is critical for an IPO or for a P.E. as investors’ number one criteria for investment is “team”. However, the Big S companies have very experienced teams in place and often want to do things “their way” so the seller’s team is less important in this scenario.
What becomes “critical to success” are items including:
(1) Freedom to Operate (FTO);
(2) IP Patents Filed (and Approved);
(3) Clinical Validation;
(4) Market Opportunity for Unmet Clinical Need addressed by your solution;
(5) Regulatory Clearances, and
(6) Reimbursement Pathways.
We have done business with more than 100 MedTech companies in over 30 countries globally, including Fortune 500 organizations like GE, Philips, Medtronic, J&J, and Siemens. We can tell you that all of the listed items above can not only get you noticed - they will make or break a possible deal.
In the news we have all heard above the "mega mergers". The Big S companies buying equally Big S to create Super Sized Corporations. We sometimes hear from small to mid market companies that they feel out of the game. Hopefully the graph below will help you see that plenty of deals have and are still taking place even for companies at the start up stage.
So how do you approach the Strategics and If they approach you what do you do?
First, you should know that patience will be key. Big S Companies have processes that they follow and it takes time. Knowing how to navigate the waters, who to partner with (i.e. get an advisor who will know who to talk to and how to talk to) will make the difference for you. An advisor will be the best investment you can make to get the right contract. A pilot would not consider landing his/her plane without reviewing the checklist to ensure a successful landing. Perhaps it might be helpful for you to have a “co-pilot” (with a checklist) when you “land your Exit deal”? It has been proven that a knowledgeable Advisor will create a competitive environment with Big S companies and will yield higher returns than if you were do it alone. As the process unfolds , you will have to run the company and continue to grow it to keep the value you have created in the deal. Therefore, it’s important to remember to (1) Have your affairs in order; (2) Know what you want out of the deal (3) Leave your emotions away from the bargaining table; (4) Keep your eyes on the prize; and (5) Get a professional on your side. Then, let the process happen – IN M&A, Timing is everything !
Do you have questions or comments on how to approach the Strategics? Get in touch with me at firstname.lastname@example.org.
MedTech Mindset: Bulls, Bears, and Tariffs, Oh my!