Alignment between buyers and sellers goals is critical in any M&A transaction, says Patrick Lindsay, CEO of United BioSource. As a company that has been built through M&A, and has brought together a lot of smaller ventures through the process, Lindsay says it was important to determine the interest of ownership ahead of a process — for example, are they looking for an exit, a partnership with a larger company to grow the business, etc.?
“Ultimately, what it comes down to is people. It’s figuring out the values of individuals — what’s important to them, what are they trying to accomplish — and then how can we help them accomplish that?” he says.
When United BioSource acquires companies, it tends to structure deals in part on a value basis, working through the details of an offer. It would also attach earnouts and then, put its emphasis on helping them reach the goals to realize those earnouts.
“You build a strong sense of loyalty with the folks that you were bringing into the organization because, ultimately, here we were buying them for a number and rather than try to keep that number low so they didn’t have a great payout, we’d actually help them execute and grow the business so they could hit their earnout,” Lindsay says. “But in the long run, they would be helping the overall good of the organization”
With smaller acquisitions, United BioSource was able to help in other ways, one of which was market reach — more customers — in part by scaling services so they could be offered to a wider sector.
Generally, when United BioSource looks out into the market, it’s not focused on the exit. Instead, it’s trying to determine where the market is going. What it finds will help the company decide whether it should acquire a company to help it achieve the innovation it thinks will help patients, the company’s core focus, or if it should just build the innovation itself.
“At the end of the day, you’ve got to look at things that make sense for what you’re trying to accomplish,” he says.
Lindsay spoke in more detail at the Smart Business Dealmakers Philadelphia Conference about the company’s M&A history, as well as its approach to the M&A process. Watch the video to catch the full conversation.