CBI 12th Annual Life Sciences Accounting & Reporting ...2).pdf · CBI—12th Annual Life Sciences...

CBI—12th Annual Life Sciences

Accounting & Reporting Congress

M&A Playbook

March 22, 2016

Ben Clark

Partner, M&A Transaction Services

Deloitte & Touche LLP

Chris Franck

Principal, M&A Consulting Services

Deloitte Consulting LLP

Bob Owens

Assistant Controller, Bristol-Myers Squibb

2 M&A Playbook Workshop Copyright © 2016 Deloitte Development LLC. All rights reserved.

Pre-deal structuring and considerations

• Drivers and trends in Life Sciences M&A

• Upfront considerations and various structures

• Accounting considerations

Deal execution

• Due diligence—Accounting and Tax

• Leading practices in deal integration

• Synergy capture

Agenda


This presentation contains general information only and Deloitte is not, by means

of this presentation, rendering accounting, business, financial, investment, legal,

tax, or other professional advice or services. This presentation is not a substitute

for such professional advice or services, nor should it be used as a basis for any

decision or action that may affect your business. Before making any decision or

taking any action that may affect your business, you should consult a qualified

professional advisor.

Deloitte shall not be responsible for any loss sustained by any person who relies

on this presentation.

Disclaimer

Drivers and trends in

Life Sciences M&A

Ben Clark



Chris Franck




Drug development’s unique risk profile helped drive the consolidation of research-

based pharmaceutical and biotechnology firms through a series of large-scale M&A

transactions to form large scale research and development (“R&D”) engines

Changing Environment—Industry Consolidation

Past (1999)

Source: Datamonitor “Big Pharma Mega-Mergers 1995–2014” report; Factset Mergers; Deloitte Consulting LLP Analysis

Note: Illustrates historical M&A deals above $2.5 billion for the 20 largest biopharmaceutical firms by market capitalization (Nov-2013); Acquisitions of several generic firms excluded

J&J

Novo Nordisk

Eli LillyBMS

Takeda

AstraZeneca

Sanofi

AbbVie

RochePfizer/Allergan

Amgen

Teva

GSK

Celgene

Merck

ALZA

Biogen Biovail

Amgen

Celgene

Astra

Bayer AG

Centocor

Genentech

Chiron

DuPont

Gilead

Cephalon

Eli Lilly

J&J

IDEC

Immunex

KOS Pharma

Hexal

IVAX

Nycomed Onyx

Pfizer

Medicis

Pharmacia

MedImmune

Pharmasset Pharmion

Novo Nordisk

Sanofi

Takeda

Warner-Lambert

Solvay Stiefel Labs Synthelabo

Small Molecule focus Large Molecule focusSmall and Large Molecule

Valeant

BMS

Genzyme

Ciba Geigy

Imclone

OrganonBiosciences

Millenium

Teva

Zeneca

Gilead

Bayer AG

Valeant

Novartis

Alcon

Amylin

GlaxoWellcome

Merck

Schering AGScheringPlough

Wyeth

Aventis

Knoll

Roche

SmithKlineBeecham

Abbott Abgenix Abraxis

Biogen Idec

58 pharmaceutical and biotechnology firms… ... now comprise 20 companies

Present (2016)


M&A Trends—Life Science Announced Deals

0

50

100

150

$0

$50

$100

$150

$200

$250

Feb-1

4

Apr-1

4

Jun-1

4

Aug-1

4

Oct-1

4

Dec-1

4

Feb-1

5

Apr-1

5

Jun-1

5

Aug-1

5

Oct-1

5

Dec-1

5

Vo

lum

e

Valu

e (

US

$B

)

Global Life Sciences M&A—Monthly

Strategic Value PEI Value

0

10

20

30

40

50

$0

$50

$100

$150

$200

$250

Feb-1

4

Apr-1

4

Jun-1

4

Aug-1

4

Oct-1

4

Dec-1

4

Feb-1

5

Apr-1

5

Jun-1

5

Aug-1

5

Oct-1

5

Dec-1

5

Vo

lum

e

Valu

e (

US

$B

)

US Life Sciences M&A—Monthly


0

200

400

600

800

1,000

1,200

1,400

$0

$100

$200

$300

$400

$500

$600

2010 2011 2012 2013 2014 2015

Vo

lum

e

Va

lue

(U

S$

B)

Global Life Sciences M&A—Annual


0

50

100

150

200

250

300

350

400

$0

$100

$200

$300

$400

$500

2010 2011 2012 2013 2014 2015

Vo

lum

e

Valu

e (

US

$B

)

US Life Sciences M&A—Annual


Source: Thomson Reuters November 2015: Pfizer Inc. agreed to merge with Allergan PLC for $191.5 billion.


Top 10 Announced Life Science Deals—2015

Source: Thomson Reuters

Top 10 Global Transactions—2015

Date

AnnouncedAcquiror

Acquiror

NationTarget

Target

Nation

Target Sub-

Sector

Value

(US$B)

11/23/15 Pfizer Inc. US Allergan PLC US Pharmaceuticals 191.5

07/27/15 Teva Pharmaceutical Industries Ltd. IsraelAllergan PLC-Generic Drug

BusinessUS Pharmaceuticals 40.5

08/04/15 Shire PLC Ireland Baxalta Inc. US Pharmaceuticals 33.7

03/04/15 AbbVie Inc. US Pharmacyclics Inc. US Pharmaceuticals 19.9

02/05/15 Pfizer Inc. US Hospira Inc. US Pharmaceuticals 16.8

02/22/15Valeant Pharmaceuticals International

Inc.US Salix Pharmaceuticals Ltd. US Pharmaceuticals 15.9

05/18/15 Endo International PLC US Par Pharmaceutical Holdings Inc. US Pharmaceuticals 8.0

05/06/15 Alexion Pharmaceuticals Inc. US Synageva Biopharma Corp. US Biotechnology 7.7

07/14/15 Celgene Corp. US Receptos Inc. US Pharmaceuticals 7.2

11/02/15 Shire PLC Ireland Dyax Corp. US Biotechnology 6.2

Top 10 US Transactions—2015

Date

AnnouncedAcquiror Acquiror Nation Target Target Sub-Sector

Value

(US$B)

11/23/15 Pfizer Inc. US Allergan PLC Pharmaceuticals 191.5

07/27/15 Teva Pharmaceutical Industries Ltd. Israel Allergan PLC-Generic Drug Business Pharmaceuticals 40.5

08/04/15 Shire PLC Ireland Baxalta Inc. Pharmaceuticals 33.7

03/04/15 AbbVie Inc. US Pharmacyclics Inc. Pharmaceuticals 19.9

02/05/15 Pfizer Inc. US Hospira Inc. Pharmaceuticals 16.8

02/22/15Valeant Pharmaceuticals International

Inc.US Salix Pharmaceuticals Ltd. Pharmaceuticals 15.9

05/18/15 Endo International PLC US Par Pharmaceutical Holdings Inc. Pharmaceuticals 8.0

05/06/15 Alexion Pharmaceuticals Inc. US Synageva Biopharma Corp. Biotechnology 7.7

07/14/15 Celgene Corp. US Receptos Inc. Pharmaceuticals 7.2

11/02/15 Shire PLC Ireland Dyax Corp. Biotechnology 6.2


Trends Driving M&A For Many Life Sciences Companies

Pharmaceutical and medical device manufacturers are

looking to increase scale to address pricing pressures

Pharmaceutical companies are focusing on generics

and specialty

Pharmaceutical companies are simplifying portfolios to focus

on core competencies

Life sciences companies are part of a developing trend of

corporate inversion transactions

Health reform and shift to value


Potential issues

& challenges

• Change in healthcare environment

• Increased focus on cost effectiveness for prescription drugs

• Recent focus on “complicated” disease conditions with unknown disease pathways and drug targets

• Survival rates for both small molecules and biologics have been decreasing

• Lengthy and costly clinical trials to demonstrate efficacy, safety, and appropriate outcome measures

Observed themesIn search of more blockbuster drugs Fill the R&D pipeline gap Improve investment decision-

making process

Unstated primary

objectives

Maximize expected value, multiple

shots on goal

Sustain short-term revenue,

increase number of programs

in R&D

Minimize total R&D costs

Risk attitude/

preference

Risk seeking Increase in risk seeking

behavior

Risk aversion

Steps taken to

achieve

objectives

Prioritize diseases with high prevalence

rate

Increase in collaboration

between companies

Seek partners to share

development costs and

advance R&D

R&D budget

Common Trends in Life Sciences M&A

2007 2008 2009 2010 2011 2012 2013 2014 2015

Upfront considerations

and various deal

structures

Bob Owens

Assistant Controller, Bristol-Myers Squibb

• Acquisitions or divestitures (full / partial transfer of ownership)

− Business combinations

− Asset acquisitions

• In-licensing / Out-licensing arrangements (no active participation)

− May require ongoing obligation to perform

− Flexible license period

• Collaborations (active participation)

− Virtual or Separate JV

◦ Co-development

◦ Co-marketing

◦ Co-promotion

• R&D funding arrangements

• Options or warrants

Common Types of Transactions and Structures

• Access to:

− New medicines, therapies or indications

− New geographic markets

− New customers

− New professional talent

− New ways of thinking

• Sharing of risks and efforts

− Can change over time

• Ability to leverage strategic strengths of each party

• Opportunity to alter rights and obligations in the future

− Could facilitate an exit strategy for a party

Collaboration

Potential Benefits

Collaboration (cont.)

Potential Drawbacks

• Accounting matters (fully understand rights and obligations):

− Multiple element arrangements

− Variable interest entities

− Principal vs. Agent

• Cultural differences

• Decision making process might be cumbersome

• Strategic priorities may change over time

• Reliance on another party for financial information

• Challenges in monitoring overall performance

• Unwind or termination process

Purchased Options

Potential Benefits Potential Drawbacks

• Limits initial risk and investment

• Flexibility in acquiring an entire

company or just specific assets

• Allows for further development to

assess value

• Facilitates seller exit strategies

• Potential tax impacts

• Option may expire worthless

• Potential lack of desired participation

• Limited accounting guidance whether

to capitalize or expense

• Potential embedded performance

obligations

• Potential variable interest entity

(“VIE”) issues

• Recent Accounting Standards Update

(“ASU”) (Fair value impacts to P&L)

R&D Financing

Potential Benefits Potential Drawbacks

• Maintain control of development

• Retain ownership of intellectual

property (“IP”)

• Separate legal entities can be utilized

• Provides risk sharing

• Potential near-term P&L benefits

• Ability for investee to redirect R&D

spending in additional areas

• Flexible payback schemes

(milestones / royalties)

• Inability to obtain “real” risk transfer

• Difficult to define “success criteria”

• Basket (portfolio) approach often

exceeds “probable” threshold

• Difficult to assess reasonableness of

technical and regulatory success

(“PTRS”) assumptions

• Cannot repay regardless of R&D

outcome

• Significant repayments usually

required if outcome is successful

Accounting

considerations

Ben Clark




Considerations for Common Types of Transactions

Has control been obtained (lost) through the acquisition (divestment) of a business or

asset?

• Potential impacts: differences in accounting, diversity in practice, SEC focus

• Determining whether the acquired set is a business or an asset

• FASB standard-setting project

If the transaction does not involve the acquisition (divestment) of a business/asset,

has control been obtained (lost) through other means?

• Applying the business scope exception

• Identifying variable interests

• Determining whether the entity is a VIE

• Identifying the primary beneficiary

If control has not been obtained (lost), what accounting may apply?

• Collaboration accounting—ASC 808

• Joint venture accounting—ASC 323

• R&D funding arrangements—ASC 730

• Accounting for licensing arrangements—various

1

2

3


Area Business Combination Asset Acquisition

Measurement of assets and

liabilities

Fair value (some exceptions) Allocate purchase consideration

based on relative fair values

Transaction costs Expense as incurred Record as a component of the

consideration transferred

Contingent consideration Generally record at fair value;

mark to market through P&L

post-close if a liability

Recognize when resolved and the

consideration is paid or becomes

payable

In-process Research and

Development (“IPR&D”)

Capitalize as an indefinite lived

asset until project completed or

abandoned

Expense assuming no alternative

future use

Goodwill Recognize as standalone asset Cannot be recognized, the excess fair

value of the consideration is allocated

on relative fair value basis

Leases classification Reassessment of lease

classification is not required,

unless significantly modified

Reassess lease classification

Adjusted earnings

(some companies)

Amortization of intangibles / fair

value adjustments to contingent

consideration are adjusted out of

earnings

No adjustments

Business vs. Asset—Common differences in accounting


Business vs. Asset—Common differences in taxArea Business Combination (i.e.,

Taxable Share Acquisition)

Taxable Asset Acquisition

Tax basis Buyer gets carryover tax basis in assets

(unless target is a sub of a consolidated

group or an S-corporation and an

election is made)

Buyer gets fair market value (“FMV”)

tax basis in assets

Tax attributes (e.g.,

Net operating losses

(“NOLs”), tax

credits, etc.)

Generally carryover Do not carryover

Historic income tax

liabilities

Historic liabilities transfer to buyer Generally no transfer of historic

income tax liabilities to buyer (other

types of tax liabilities, e.g., sales tax,

may carry over)

Seller’s taxability on

sale

Usually single level of tax for seller Usually a double level of tax for seller

(but may be reduced to the extent

NOLs can be used)

Buyer/Seller

preference

Seller’s preference Buyer’s preference

Transfer taxes Generally not applicable (with some non-

US exceptions, e.g., China and India)

Transfer taxes may apply

Other May be difficult to execute due to

retitling assets


In making the determination of whether a set of activities represents a business or an asset,

key considerations include:

• Identifying the elements in the acquired group (i.e., the assets purchased and processes

transferred);

• Assessing the capability of those elements to generate economic benefits; and

• Assessing the impact of any missing elements on a market participant's ability to

generate economic benefits

Business vs. Asset—Determination

Potential Indicators of Business Combination Potential Indicators of Asset Acquisition

Key business processes acquired

(e.g., Has begun planned principal activities)

No processes acquired or only administrative

processes acquired

Entity could manage the assets to provide a return

to its owners

(e.g., Is pursuing a plan to produce outputs)

Entity could not manage the assets to provide a

return to its owners without combining them with

other assets

Key elements are missing but can be easily

replicated or obtained

Key elements are missing and cannot be easily

replicated or obtained

Able to produce "Day 1" outputs Not able to create economic benefits

Presence of liabilities and/or goodwill No goodwill present

Development-stage entities might not yet have outputs, but if a set has begun operations,

has inputs and processes, and is following a plan to produce outputs, it may qualify as a

business.


Standard Setting on the Horizon

The FASB added the project to the agenda for two primary reasons:

1. Practice issues raised in the post-implementation review of Statement

141(R), Business Combinations

2. Issues raised within the new revenue standard:

• The scope of new revenue standard includes nonfinancial assets and transactions

with noncustomers (Subtopic 610-20, Other Income– Gains and Losses from the

Derecognition of Nonfinancial Assets). However, it excludes businesses (and not

an in substance nonfinancial asset).

• The standard supersedes the partial sales guidance in Subtopic 360-20, Sales of

Real Estate leaving no guidance on partial sales of real estate

The FASB communicated that it will address the project in three phases:

• Phase 1: Clarify the definition of a business (Exposure Draft issued

November 2015, comments were due January 22, 2016)

• Phase 2: Address the accounting for partial sales and clarify the scope of

Subtopic 610-20

• Phase 3: Address business versus asset accounting differences

FASB Project: Clarifying the Definition of a Business


The definition of a business remains unchanged, but implementation guidance

includes the following key provisions:

• Fair value threshold:

− If substantially all of the fair value of the gross acquired assets is concentrated

in a single identifiable asset (or group of similar identifiable assets) the set is

likely not considered a business

− The FASB intends for this to be a practical “screen” to avoid having to apply

the rest of the model.

• One or more substantive processes should be included in the transferred set, in

addition to an input, for it to be considered a business:

− The Board provided a framework to assist in this determination which is based

on whether the transferred set has outputs.

• Outputs are defined similar to goods or services provided to customers (i.e.,

focus on revenue).

• Applied prospectively after the effective date, often with no required disclosures

at transition.

Main Provisions of the Exposure Draft

Accounting and Tax

Due Diligence

Ben Clark




Item Period Diligence Team

Historical EBITDA/FCF xx

+/- Non recurring items xx Due Diligence

+/- Pro Forma items

• Cost savings/restructuring

• New revenue opportunities

xx

xx

Earn Outs

Normalized EBITDA/FCF

x Transaction multiple

xx

xValuation

Enterprise Value

+ Cash

- Debt

xx

xx

xx

Purchase Price

Adjustment

Equity value (unadjusted)

+/- Excess assets/liabilities

+/- Tax considerations

xx

xx

xx

Due Diligence/

Purchase Price

Adjustments

Adjusted equity value

- Escrow

xx

xx

Closing equity proceeds xx

Common valuation determinants


Typical Diligence Focus Areas

Due

Diligence

Financial

Accounting

Function,

Reporting

Structure and

Other Items

Quality of

Earnings

Contract

Support

Working

Capital

and

Net Debt

Cash Flows

and

Forecast

Change of

Control

Commitments

and

Contingences


Common Accounting Diligence Considerations

Quality of

earnings

• Non-recurring,

unusual, non-

cash and out-

of-period

charges

• Revenue

recognition

• Rebates,

chargebacks,

discounts,

product returns

• Channel

stuffing

• Patent expiry

Working capital

• Working

capital

composition,

seasonality

• Capital

expenditures

• Nature of

“Other Assets”

• Nature and

amount of

liabilities

Commitments &

contingencies

• Contingent

liabilities

• Key customer

arrangements

• Customer/distri

butor and

supplier

contracts

• Change in

control

• Product

liabilities

Quality of assets

• Accounts

receivable and

allowance for

bad debt

valuation

• Inventory

valuation and

reserves

• Other recorded

reserves


• Inquire about tax structure and overall tax footprint in all significant jurisdictions

• Inquire about key tax positions and significant tax accounting methods

• Endeavor to identify risks, quantify historical tax exposures, and assess adequacy of existing

tax contingency reserves

• Evaluate GAAP and statutory reporting of taxes and inquire about key effective rate drivers,

including off-shore “trapped cash” (as applicable)

• Inquire about tax examination history, any current examinations, and any other

correspondence with taxing authorities

• Analyze transaction history including any related tax planning strategies

• Inquire about any intercompany transactions, tax arrangements, and/or related party

transactions

• Assess available tax attributes and potential limitations on the use of such attributes

• Consider state and local tax matters (physical presence and apportionment of income, etc.)

• Inquire about non-income tax (medical device excise, branded pharmaceutical fee,

sales/use, payroll, etc.) policies and procedures

• Consider potential transaction related deductions and potential limitations there on (golden

parachute payments, transaction costs, etc.)

• Other: potential structuring alternatives and mitigation of identified risks

• Endeavor to identify post-acquisition integration matters (tax planning, tax department

needs, day 1 planning, etc.)

Common Tax Diligence Considerations


Common quality of earnings considerations in life science transactions

Due Diligence—Life Sciences Deep Dive

• Gross-to-Net

− Rebates—consideration of long tail and exposures

− Loss of exclusivity and generic intrusion driving returns exposures

− Ability to estimate accurate reserves

− Understand exposure in channel of rebates, chargebacks, or returns.

• Purchase Accounting

− Step-up in inventory

− Deferred revenue

− Intangible amortization.

• VIE considerations around R&D collaborations

• Annual Branded Pharma Fee

− Understanding how you and the target calculate the fee and true-up

− Acquired company’s sales may drive increased effective fee percentage

− Working Capital—recurring in nature and directly attributable to ordinary operations,

similar to other non-income taxes; seasonal considerations

− Debt—Longer tail than most working capital liabilities; fee attributable to prior year

activity for which seller received the benefit and buyer obtains liability.


Applying what you have learned in due diligence to purchase agreement

Execution

• Typical net working capital applications

− Provision for a working capital adjustment as part of the overall purchase price

− Target working capital amount

− Definition typically is current assets less current liabilities, excluding cash, debt, interest and income

taxes; however, modified per transaction

− Typically two-step mechanism: target vs. estimated closing amount (seller); estimated vs. final

amount (buyer)

− The adjustment mechanism may be one-way or two-way, dollar for dollar, or capped to provide a

guaranteed minimum amount to the buyer at closing

− Consistent application is often key to avoiding dispute.

• Typical net debt applications

− Often included in purchase agreements for buyer’s relief

− Examples include: current and long term debt, capital leases, pension liabilities, and contingent

consideration

− Development stage companies: buyer should consider obtaining relief via net debt.


Buyer typically prefers Seller typically prefers

Process Exclusive Auction

Form Asset Stock

Working Capital—

PPA

High

Projected at close

Low

Trailing

Closing

Conditions

Indemnities—

Survival of Reps +

Warranties

1-3 years (Statute of Limitations

for Tax)

Limited—Material Adverse

Effect (“MAE”)

Expire at closing

Consideration Earn-out Closing

Escrow High Low/none

Audits—Filing

Requirements

Closing Condition Best efforts or none

General considerations for buyers

Deal integration and

synergy capture

Chris Franck




Effective integration programs typically demonstrate excellence in four

areas, which often need to be managed simultaneously

An Approach to Merger Integration

Leadership & Governance

Operating Model &

Organization DesignRealization of Value

Managing People & Change


PHASE 1

Program Set Up & Mobilization

Phase 2

Day 1 Planning & Execution

Phase 3

Integration Planning & Execution

Co

mm

on

Pro

gra

m

se

tup

& M

ob

iliz

ati

on

Ac

tivit

ies

Co

mm

on

Org

an

izati

on

de

sig

n &

Se

lecti

on

Ac

tivit

ies

Co

mm

on

In

teg

rati

on

pla

nn

ing

&

da

y 1

ex

ecu

tio

n

Ac

tivit

ies

Integration programs typically fall into three phases, the length

of which is usually governed by the transaction timetable

Integration program structure & governance agreed (including PMO set up)

Acquirer integration resources identified

Integration Director appointedAcquirer Team Mobilization Event

Vendor integration resources identified

Joint Mobilization Event

Integration blueprint developed

Organization structure and operating model agreed

Selection and appointment process for overlapping positions agreed

CEO and direct reports (Level 1 appointed)

Level 2 management appointed

Relocation and retention policies agreed (including tax implications)

Day 1 Functional checklists

developed Execution of Day 1 functional

checklistsDevelopment of integration project plans

(Charters) and Milestone Plans Execution of integration project

plans and synergy delivery

Transaction Management & Regulatory Approvals

Transitional Services Agreements negotiated with vendorExit from TSAs

Level 3 management appointed

1st Draft Synergy Model developed Synergy Model validated

and combined baseline

approved

Day 1

Steering Committee reporting frequency agreed and implemented


Integration “blueprints” can help lead to Day 1 success

Common

Benefits of

a Blueprint

• Alignment

• Clarity

• Roadmap

• Timeline

• Key principles

• Communication Tool

Vision &

StrategyAgreement on the

degree of

integration and

organizational

implications

Degree of

integration

Synergy

benefits

Key

milestones

Risks & issues

Key principles

Program

management


Most serial acquirers focus integration efforts on ten critical areas

Leading integration focus areas

Clearly defined and aligned vision

Unambiguous governance

Roadmap to success

Relentless focus on revenue and cost synergy capture

Customer experience and revenue growth

Company culture and employee experience

Stabilized workforce

IT systems integration

Transition support and TSAs

Issue-free Day 1GO!


A small working team should validate the defined sources of benefit and to

help identify new opportunities for increased return as early as possible

The Synergy Case—driving execution and planning

The aim of this exercise is to help identify benefits are:

• Definable and quantifiable

• Have clear ownership and accountability

• Linked to lead KPIs and operational milestones

• Baselined against previous performance

• Prioritized—what are the 6-8 must deliver projects?

• Integrated into the organization’s financial and

performance measurement processes

Pre-Acquisition

Value

A

B

Value capture

A

Value creation

A

BB

Leveraging

best selling

practice,

knowledge

and cross

Va

lue

cre

ate

d

for

sh

are

ho

lde

rs

Pre

miu

m p

aid

to

targ

et

sh

are

ho

lde

rs

B

Changing

the Rules

Changing

portfolio and

increasing

performance

Increasing

revenue

and/or

margin

Re-

engineering

business

processesReleasing

duplicate/

unnecessary

assetsReducing

third-party

expenditure

Rationalizing

suppliersConsolidating

overlapping

operations

Acquisition costs

Distraction Disruption

Integration costs

Cultural impact

Acquisition-

Related Costs

Organizational

EfficiencyProcurement

Rationalize

Operations

Business

Processes

Transfer

Capabilities

Revenue

GrowthBusiness

Strategies

Market

Transformation


Consider lessons learned when approaching the Synergy Planning

Process during synergy identification and development to help reduce time

consumption and impact

Synergy Planning Key Takeaways

Establish Leadership Early

Establish Accountability

Integrate Synergy And Cost

Information

Be Specific

Consider Tracking

Requirements Early

Keep Regulatory

Guidelines In Mind


Beyond traditional challenges, some integrations involve

greater complexity

Deal Attributes May Amplify Challenges

Potential implications for integration

• Increase scrutiny from stakeholders, both internal and external

• Robust, joint decision making required

• Culture, language and logistical challenges

• Line management disconnect and discontent

Mega merger of

equals; similar

size, scale, scope

Aggressive

synergies and

growth

expectations

Cross-border,

global integration

Dual

headquarters, joint

leadership

Sources of complexity


Merger failure may not be caused by buying the

wrong business, but by how the acquired business is

integrated

Common integration

errors

What we

paid

What we

should

have paid

What we

achieved

Transaction Gap

Integration Gap

Common transaction

errors


Appointment of the right integration leader is often a critical decision taken

early in the integration process.

Integration Leaders

Consulting with internal and external integration experts can provide direct

support to the integration leader throughout the engagement to ensure that

expertise is transferred to the broader team. This collaborative approach

often produces the most effective programs.

What are the common attributes of a

strong integration leader?

How can the integration team help

increase the integration leaders

chances of success in the role?

Presenter biographies


Partner, Life Sciences and Health Care

M&A Transaction Services


Service Area: Advisory

Years with Deloitte: 21

Tel: +1 213 688 4166

E-mail: [email protected]

Ben has 21 years of experience with Deloitte, with 17 years as a dedicated M&A specialist and currently leads Deloitte’s west

coast Healthcare & Life Sciences M&A Transaction Services practice. He has experience in advising both domestic and

cross-border financial and strategic buyers and sellers on many aspects of acquisitions, including: due diligence, accounting

structuring, financial reporting, transaction and financing documents and the preparation of pro forma financial statements.

He also assists clients with many aspects of dispositions, such as: self or vendor due diligence, the preparation of data room

materials and the preparation of carve-out financial statements.

Ben has served clients in a wide range of industries, including many sectors of the healthcare and life sciences industries

such as acute care hospitals, biotech, clinical research organizations, diagnostic testing, durable medical equipment, home

health, infusion therapy, lab services, long-term care, pharmaceutical, pharmacy, physician practice management and

specialty pharmaceuticals.

Ben holds a BA degree from Princeton University and a MBA from New York University.

Benjamin E. Clark

mailto:[email protected]


Chris joined Deloitte in 1993 and is a M&A Principal in Deloitte’s Life Sciences and Health Care practice based in New York.

Chris has over 20 years of strategy and M&A consulting experience in the life sciences industry. He has deep experience in

the areas of divestiture, post-merger integration, day one planning, integration planning, and synergy capture. In addition to

his transaction and integration experience, Chris also works with clients to help them develop their post-merger commercial

strategies. Chris’s clients include many of the top 20 biopharmaceutical manufacturers.

Chris is a frequent presenter at industry conferences including BIO, the Indiana Health Industry Forum, Med Ad News’

Building Better Brands conference, and the BioExec Institute. Chris has lectured at many business schools, including The

Wharton School, the Ross School of the University of Michigan and the Haas School of the University of California, Berkeley.

Chris is author of “Blueprint for the Brand,” published in Medical Marketing & Media, “To Friend or Not? New Insights about

Social Networks in the Life Sciences Industry,” published by Deloitte Research, and “Big pharma: Business model choices

for the new market,” published by Deloitte Development LLC.

In addition to his market and client facing responsibilities, Chris is the National MBA Recruiting Leader for Deloitte’s Strategy

& Operations practice.

Chris holds a BA degree in economics from Yale University, a MPH in health policy and management from Columbia

University, and a MBA from The Wharton School.

Christopher Franck

Principal, Life Sciences and Health Care


Service Area: Strategy & Operations

Years with Deloitte: 17

Tel: +1 973 602 4121

Mobile: +1 917 514 1762

E-mail: [email protected]

mailto:[email protected]

Robert Owens

Vice President and Assistant Controller

Bristol-Myers Squibb

Robert is Vice President, Assistant Controller at Bristol-Myers Squibb. He is responsible for financial reporting and technical

accounting, including SEC filings, alliance reporting, treasury and strategic transaction accounting and corporate accounting

policies and procedures. Prior to joining BMS in 2008, Mr. Owens held various finance executive positions at Lucent

Technologies, including Chief Accountant. In this role, Bob was also responsible for converting Lucent to International

Financial Reporting Standards upon the merger with Alcatel. Prior to joining Lucent in 1998, Bob held various controllership

roles with Air & Water Technologies. Bob also spent nine years at Arthur Andersen from 1981 to 1990 in the accounting and

audit practice. Throughout his career, Bob has extensive experience in strategic mergers, acquisitions, divestitures, spin-offs

and collaborations. Bob earned a bachelor’s degree in accounting from Wilkes College. He is a member of the AICPA

(including Financial Reporting Executive Committee) and is a licensed CPA in New Jersey.

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