M&A STRATEGY
Scientia's M&A experience and perspective
Scientia has advised many firms on key aspects of M&A from identifying and prioritizing attractive companies, isolating core competencies that often underpin the basis of quantifying synergies to performing valuation analysis on the target companies. Whether it is an industrial firm looking to move into attractive markets in healthcare or a leading life sciences firm looking to make “niche” acquisition to enter a high growth market, Scientia has been at the forefront of enabling key strategic M&A decisions at board rooms all over the world. We also leverage our extensive database of the emerging and established Life Science companies and technologies to help clients evaluate the potential value of externally developed innovations that can extend their leading positions in the core business. This allows our clients to identify and evaluate emerging firms in a rapid manner. In an industry where the average M&A transaction can last more than 16 months, Scientia’s disciplined approach can markedly expedite the M&A decision-making process allowing our clients to extract a competitive advantage in a highly competitive M&A market.Scientia’s offers the following services as part of our Strategic M&A Practice:
- Identification and Screening of M&A Candidates: Using Scientia’s extensive database of emerging as well as established Life Sciences companies, we can quickly draw upon a vast array of information about target companies in short order. This information includes detailed product portfolio review, IP strength, technology platforms, segment focus, financial and operating performance and channel strength. Often times, attractive candidates are private firms which Scientia follows closely as part of our data gathering process for our database. Having such information at our fingertips, we can assist our clients screen candidates in an efficient and timely manner.
- Candidate Drill-Down: Once candidates are screened and most attractive ones identified, we prepare a detailed drill-down on the selected candidates based on Scientia’s database as well as publicly available data. This is critical in developing organizational consensus and momentum in moving towards a strategic transaction. Our drill-downs have been particularly helpful in assisting senior executives and board members as well as operating managers fully understand key strengths and weaknesses of acquisition candidates, their business models as well as key value drivers. We take a deep look at both technology and channels synergies between our clients and candidate firms to help evaluate strategic fit between our client and target candidates.
- Valuation and Due Diligence: Given the complexities of the Life Sciences markets, valuation can be a highly cumbersome and almost speculative exercise. We believe that valuation is as much a science as it is an art. Often times, companies make the mistake of taking an overly “mechanical” approach to valuation by applying “industry comparable multiples” and using discounted cash flow models with highly uncertain growth rates and profit assumptions. Often, such techniques result in valuation ranges that are not in line with market realities and the intrinsic risk associated with a particular candidate. Scientia’s expertise in Life Sciences markets allows us to assess the market expectations of growth and assessing company specific risk on a company by company basis. Our valuation techniques involve multiple approaches. Apart of industry comparables, we think it is critical to analyze “economic comparables” that may represent the target companies more accurately given their unique market position and risk. While we do perform discounted cash flow analysis, we have analyzed historical growth rates of firms at different stages of their life cycles which allows us to make assumptions that are grounded in market realities and take into account risk factors. We think that in any strategic M&A activity particularly in competitive situations, valuation is a critical step and any mistakes made here can significantly jeopardize successful completion of a transaction. Scientia’s approach is suited for the unique aspects of the Life Sciences industry and allows our clients to accurately value firms based on market realities and expectations.
