Bolt-on integrations can extend reach, deliver niche product development and increase innovation. They are seen to be a game changer for Life Science organisations, helping them penetrate new markets with exciting and revolutionary therapies.

 

In the search for innovation and growth, the Life Sciences sector is seeing an increase in the acquisition of smaller organisations as bolt-on integrations, to drive pipeline development and diversification. These bolt-ons are likely to have an entrepreneurial start-up culture, be highly innovative and are often not yet generating revenue or profit.

The bolt-on strategy is moving established players into new therapy areas.  For these acquisitions to be successful they must reassess their traditional sales, commercial, operational and R&D models.

It’s vital to understand how to integrate the bolt-on into the legacy structure and culture of the acquirer.  Whilst these types of integrations are less disruptive than large scale transformational acquisitions, they are not without risk and could ultimately erode value without a coherent plan to manage the process.

Acquirers in Life Sciences should allow for flexibility across key people and culture areas when planning to integrate bolt-on acquisitions, so acquired companies remain unique and drive incremental value.

The value in bolt-on acquisitions is the people that come with the business. They are the ones who will develop the products, share the innovation, bring the energy and build the vision. The acquirer needs to handle this ‘asset’ in a considered and proactive way by introducing tools that protect and realise the commercial potential.  

We’ve been supporting organisations in this area for over 25 years and, based on that experience, we believe that getting the people and culture elements right – from the very outset – is key to success. There are three key areas that organisations should focus on:

  • Talent acquisition
  • Culture
  • Organisation design and talent management

Enabling bolt-on companies to retain their own recruitment initiatives enables them to maintain their agility in the job market. This approach means they can secure targeted talent, with the required niche skills, through a flexible recruitment process – rather than potentially losing the talent to competitors because of the acquirer’s sometimes overly process led and inflexible approach to recruitment.

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Case study

Attracting niche talent during transition

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Attracting niche talent during transition

We supported a global Life Sciences organisation in completing a bolt-on acquisition of a target business that was dedicated to developing gene therapies for neurological genetic diseases. Acquiring talent was a strategic focus and critical to the ongoing production of the therapies, which required niche and specialised skills. It was vital this wasn’t impacted by the integration. Following the transaction, the acquired company-maintained control over all recruitment activities. That meant it could continue to attract talent and compete onboarding quickly, during a period of transition, without having to align to new, global processes. This allowed the integration to deliver on deal value and mitigated the impact on innovation, product development and production.

People

Retaining the entrepreneurial spirit and uniqueness of the acquired company’s culture is a priority, to ensure it continues to perform and thrive, without losing its identity through a large integration programme. Acquirers we’re working with are following a considered approach to culture alignment by allowing bolt-on organisations to retain their unique position on innovation and fresh thinking; deprioritising the push to integrate and align to their own values.

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Case study

Marrying start-up culture with global strength

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Marrying start-up culture with global strength

Following deal close, the acquired company’s leadership team identified non-negotiable aspects of its culture, which were important to retaining aspects of its start-up principles. The team also agreed on key integration practices to recognise the role of the acquirer. Such non-negotiables included access for all employees to the leadership team and the continuation of quarterly collaboration events, to share innovation and inject fresh thinking into product development. This allowed the acquired company to retain its uniqueness, while also having access to the benefits of being part of a larger, more global organisation, through practices such as an increased R&D network.

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Bolt-on acquisitions follow a ‘lift and shift approach’, allowing the acquired business to remain standalone. It’s important that there is clarity over roles and responsibilities and to take a nimble approach to organisation design to drive operational alignment. Acquirers are moving away from the traditional focus on retaining people and talent, towards retaining knowledge. While talent is important, acquirers understand that setting up clear practices to manage, document and transfer knowledge to a wider group of people, is a higher priority than retaining key individuals.

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Case study

Sharing special knowledge through integration projects

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Sharing special knowledge through integration projects

Having completed a bolt-on acquisition, resulting in large management pay-outs, the acquirer identified the risk of key individuals leaving almost immediately once the deal closed. To mitigate the impact on the purchased assets, the acquirer included knowledge transfer through the setup of key integration projects across internal and market facing priorities allowing special knowledge to be shared across groups of people and mitigating the risk of losing key individuals.

In parallel there needs to be a focus on value enhancement, whereby the acquirer needs to make the acquired business ‘safe’ in terms of regulatory, financial and legal compliance in order to protect the reputation of the acquirer.

Knowledge

Conclusion

Subtlety is the strategy

Acquirers across Life Sciences continue to be driven by the benefits of bolt-on integrations and are looking for opportunities to diversify their product range and accelerate the introduction of new products to market. They’re doing that while retaining the incremental value of their acquired people, assets and culture, recognising the need for flexibility during integration planning and preserving the “uniqueness” of the acquired company. Life Sciences companies are increasingly aware that this, supported by a nimble stance on organisation design and knowledge retention, will determine the success of bolt-on acquisitions and pave the way for a more focused, comprehensive integration in the future.