Case Study

Merger of Australian and South African Pharmaceutical companies provides succession plan and exit strategy for owner 

Background

Our client was a pharmaceutical company with turnover of approximately $25 million. It was 100% owned by interests associated with the CEO and his wife. It had and continued to experience significant revenue and earnings growth and was beginning to get on the radar of large industry players.

In early 2010 a South African based pharmaceutical company approach our client about a possible acquisition. It quickly became apparent that our client’s business was larger than the inquisitor thought so the concept of an acquisition shifted to that of a merger. 

Client Issues

The key issues our client faced were:

  • No succession plan or exit strategy
  • Owner dependency
  • Unknown business value

Our client had no succession plan, however, there was recognition of the need to structure the business in such a way that at the appropriate time it was a highly saleable. 

Outcomes

Today the merger entity has expended into Asia and has a mission to strives for excellence in the provision of vitally important specialty products and is committed to securing innovative medicines and technology, delivering equity and access to world class therapies

The company has an objective of increasing revenue and earnings 200% and 500% in the next 3 years – ambitious but genuinely realistic.

Strategy

Negotiations were held between the parties which Simon Clatworthy was actively involved in and in November 2010 a Heads of Agreement was signed.

Aside from the “normal” challenges associated with a merger transaction this merger had the added complexity of involving multi tax jurisdictions and geographic separation and time zones. The implication of which was that the transaction took longer to finalise and the resulting corporate structure of the merged entity was materially different to that initially anticipated.

We managed the merger transaction from our client’s perspective through to completion.

Considerable time was invested in ensuring the cultures of the merging companies and operating philosophies were congruent and that the business strategy moving forward was 100% agreed.

The transaction involved a progressive merger of the respective businesses over a 3 year period that concluded at the end of FY13.

The transaction enabled our client to take some money off the table as well as having a meaningful stake in the merger entity moving forward.

At an operational level our client has taken on the role of Executive Chairman and the key representative from the other side is the Global Managing Director, illustrating the cohesive nature with which the business is operating.

MAKE AN ENQUIRY

Call Us 1300 995 981