Creating communications excellence

You won’t need me to tell you pharmaceutical marketing is a very active sector for business sales.

Even so, the statistics may surprise you. According to Standard & Poor’s database CapIQ, the acquisition of a UK-based medical communications business happens every 19 days. A contributing factor is the presence of serial acquirers – buyers pursuing a prolific, long-term strategy, often backed by PE. In fact, in the past three years, 89% of acquirers had bought at least one business before.

Buyers will compete for the best businesses. In our experience at M&A advisor BCMS, supporting multiple medcomms clients through sales transactions, there are some key themes that drive the multiple of profit acquirers are prepared to pay.

The first ‘green light’ is people: accessing the highly qualified, expert professional teams you’ve spent years developing. The second is your customers. If you can demonstrate a strong track record of delivery in your chosen therapy areas, working for top pharma clients, then that is a positive. Having a strong management team in place will provide continuity and confidence post-acquisition. And, of course, buyers prize dependable revenue streams, especially if secured via MSAs or contracts.

Conversely, risk reduces buyer appetite. For buyers, over-dependence on one or a small handful of clients is likely to put them off. If you, as an owner-manager, are critical for day-to-day operations, then this may be a red flag if you are looking to exit immediately.

With people at the heart of any deal, it’s hard to understate the importance of cultural fit between buyer and seller. We are currently working with a number of medcomms businesses, and their primary concern – what keeps them awake at night, frankly – is retaining their brilliant teams. Selling might seem the solution, with the twin benefits of bringing new opportunities for colleagues, while securing the long-term legacy of the business.

But it’s only a win-win if the buyer has a shared philosophy and approach. Which is why, in this market, finding competing strategic buyers is crucial. If you’ve already had a tap on the shoulder from one buyer, it might be time to find out who else is interested.

Liz Jackson is Director at specialist M&A advisor BCMS