US medical equipment supplier Becton Dickinson & Co is currently progressing its proposed acquisition of CR Bard Inc. The $24 billion deal, expected to complete in the autumn, is the second biggest healthcare deal of the year after Johnson & Johnson’s $30billion purchase of Actelion.
The Becton Dickinson deal comes just two years after the company acquired CareFusion Corp for $12 billion and reinforces the medical devices industry’s reputation for merger and acquisition activity.
Medtronic has made a staggering 15 acquisitions since 2012, with its $49.9 billion purchase of Covidien PLC the biggest deal of them all, while Boston Scientific has been another active player with eight deals to its name during the same period.
The financial reasons are all too apparent. Consolidation gives the successful acquirers the opportunity for greater market share, increased portfolio diversification and stronger revenues and profitability.
But what does the medical devices merger and acquisition mania mean for talent in the sector?
Undoubtedly, the biggest challenge posed by an acquisition of the kind currently being undertaken by Becton Dickinson revolves around the successful integration of CR Bard’s people into its business.
Get it wrong and the consequences can be severe. Poor integration can distract managers and employees in their day-to-day roles, leading to a reduction in productivity. It can also lead to uncertainty about the future direction of the companies involved in the deal and the job security of their respective people. Sometimes, companies wait too long to put in place new leadership teams and organisational structures, causing some of the best talent to drift away to other competing businesses.
In the case of Becton Dickinson and CR Bard, one key advantage is the fact that both organisations – despite their vast size – have an equally entrepreneurial, dynamic and progressive spirit. This should make the integration process considerably easier than if the two businesses had very different cultures and outlooks.
With careful planning and by putting people and culture at the centre of the process, M&As can bring many long-term benefits.
In almost all M&As there is a dominant party, but it is crucial that one culture does not look to impose itself on the other. A so called uni-culture almost always fails whereas a more collaborative approach to the integration of two cultures and peoples is often a more effective way of ensuring a harmonious coming together of two previously independent businesses.
The successful integration of two sets of people into a newly enlarged organisation has to take account of the respective skill-sets that will come together while another critical part of any integration is the diversity piece. Not just in terms of gender, ethnicity and sexuality but also diversity of thought gained through global experience and an understanding of different cultures.
In a reducing talent pool, organisations are increasingly realising the need to future-proof the talent for their business. This includes being willing to look outside of their sector, particularly in areas such as technology, harnessing the skills of the best talent in other industries.
In the healthcare and life sciences world, one area which is particularly vulnerable during the M&A process is Research and Development. Due to the highly confidential and sensitive nature of their work, R&D teams are often the last to integrate as a company’s patents and pipeline are its most treasured assets and, naturally, are kept separate in case a deal falls through. New projects are rarely started during the negotiation period and hiring is put on hold.
An area that is often neglected during the M&A process is the emotional one. People are not robots. They have views, opinions, aspirations and ambitions that need to be considered and valued when two organisations decide to come together.
Finally, there is the question of a brand’s reputation and its ability to attract and retain the best talent. It is crucial to benchmark where a brand is today, how it is perceived in the market, and plan for how it can grow and gain further credibility once any M&A activity is completed.
The organisations which are most successful at integrating different cultures are the ones which understand that successful M&A is about far more than the financial bottom line. The key to lasting success is employee satisfaction and cultural integration. The process of integration and, importantly, good communication cannot begin soon enough.
- Armstrong Craven specialises in global talent mapping, pipelining and insight, working with some of the world’s leading brands in the healthcare and life sciences sector.