Multiple Acquisitions - Industry Roll-Up

Opportunity

A pharmaceutical firm where we were CFO had made a successful turnaround of its manufacturing operation and was now looking for next steps to grow the business.  The industry was beginning to consolidate across channels, with manufacturers and distributors joining together.  The industry was also growing rapidly and it would be difficult for any manufacturer to keep up with all the product offerings that would come off patent in the next several years.  The distribution end of the business was very fragmented at that time.

Action

The management team thought strategically about how to go beyond organic growth.  We decided the best acquisition growth strategy that would help preserve the long term manufacturing growth as well was to acquire distributors around the country.  This meant having to acquire multiple distributors, in order to generate a nationwide presence.  While some of these distributors had marketed product under a common label, they were all separate businesses.  Besides helping with the strategy, we also helped with the deal closing and most important of all, the post acquisition implementation.  There was a lot of work done to bring the companies together under common IT, accounting, finance, HR and other practices.  We also interfaced at times to help with the marketing integration as well.  Despite the aggressive timeline, we completed the major part of the implementation within a matter of months.

Result

Six acquisitions were completed under one year's time, which nearly tripled the size of the overall company from the its manufacturing base.   The distribution base helped improve the penetration of many of the manufactured products where the company was not the sole source.  Through the distributors, the company also participated in margins on products they did not manufacturer.  Meanwhile, distributor profits improved overall thanks to synergies from being together under a consolidated umbrella.