Larka

MBO

Customer Experience - Company wished to disengage from their European toxicology site, following unfavourable regulatory changes. The site management team wanted to take over the site.

 
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Team Spirit!

Context

Philip Morris International wanted to disengage from their European toxicology site, following unfavourable regulatory changes preventing them from continuing their activity in the field of tobacco. 

The site management team, with an investment firm, wanted to take over the site in order to offer services to the pharmaceutical industry. The management team and the investment firm requested Larka to make a due-diligence of the site and to assess the market they could address.

Company Profile

  • European company
  • Investing in Europe
  • 15 employees
  • 350mn EUR AUM
  • Multi-sector investment approach
  • Long-term investment strategy, always with a minority stake

Larka's Scope Of Intervention

Larka assisted the management team and the investment fund as follows:

  • Due diligence
    • Site assessment
      • R&D capabilities
      • Type of equipment
      • Maturity, capacities, performances, and optimisation
      • Quality audit
    • Site transformation
      • Relevance
      • Data analysis and corrective actions
      • Flexibility, similarity, adaptability
    • Human resources assessment
      • Site director, management, R&D and QA/QC teams
      • Internal know-how Vs. Philip Morris' know-how
      • Skills/resources gap
  • Strategic plan
    • Market assessment - potential potential value, barriers to entry, potential customer identification and market survey, competitors' profiles, SWOT analysis
    • Marketing plan - brand building, ad campaign, target identification
    • Identification and preparation of support functions performed by PMInt - finance, legal, logistic & supply
    • Key staff identification: secure key people, package definition, ensure support to future strategy
    • Communication plan: ensure smooth post acquisition transition
    • Definition of key differentiating expertise and CAPEX - R&D equipment, quality system upgrade, site transformation
    • Recommendations

Conclusion

Larka estimated the risk - CAPEX, staff and brain drain, lose of PMInt support on support function, etc. - in comparison with the market potential was too important for the site to address the pharmaceutical market with relevance.

The investment firm and the management team followed Larka recommendations and decided not to make the MBO.