Tag Archives: Mergers & Acquisitions

What’s ahead for the life sciences industry? One word: Growth.

Like the focused medical industry, this larger category of all things related to human health research and development experienced an unprecedented period of growth during the pandemic. While that explosion is likely to level off and normalize, life sciences can expect a bright future — albeit with some challenges on the road ahead. They include supply chain disruption, staffing shortages and the increased need to become more efficient in manufacturing to keep up with demand.

Current life sciences trends

The life sciences industry is a big tent, encompassing the development and production of products and services geared toward biology, medicine and health care. We’re talking about pharmaceuticals, biotech, medical devices, clinical research, robotics, genomes and more. Everyone was witness to the great vaccine race of 2020, with big pharma rushing to develop the COVID vaccine. While that moment of urgency has, thankfully, passed, the industry is still feeling the effects of the pandemic, spurring continued growth in intellectual property.

Here are some of the life sciences trends we’re seeing in the industry for the coming year (and beyond).

Digitization

This trend isn’t unique to life sciences, but it’s definitely taking center stage in this industry. Using data analytics, artificial intelligence and machine learning to further personalize health care treatments, gain more meaningful insights, hone and enhance pharmaceuticals and devices, and improve outcomes will remain a focus in the near future and beyond.

M&A

Remember that vaccine race we were talking about? While the worldwide COVID vax panic has passed, the race for newer, better innovations in vaccines, drugs and other pharma intellectual property is still on. Like many other industries, life sciences is feeling the effects of disruption via startups. In life sciences, that means smaller companies that are going full tilt into scientific advancements. Experts believe this trend will drive a significant amount of mergers and acquisitions. Look for big pharma to target small, innovative companies. According to ContractPharma, companies with less than $250 million in revenue are powering innovation in biopharma. By 2026, ContractPharma predicts those companies will account for 60% of biopharma’s growth.

Manufacturing

All of this innovation and M&A activity is predicted to impact manufacturing as well, not only in the area of things like AI and robotics-fueled innovation and the exploding demand for personal medical devices (fueled by the telehealth tsunami) but in good, old fashioned upgrades to facilities, focuses on efficiencies, and the ability to do more with less. Because of all the innovation and increased demand, life sciences manufacturing needs to be lean and mean.

Supply chain disruption

How many of us would love to never hear that phrase again? Yet, it continues to plague almost every industry, from chicken farming to biopharma. In life sciences, it’s about costs, logistics, shortages of the drugs themselves (c’mon Hollywood, stop using Ozempic for weight loss!), and changes in trade policy.

Staffing

Staffing woes are hitting life sciences on all sides. The industry is experiencing challenges finding workers in manufacturing facilities, but it’s not just those frontline employees that are scarce these days. There’s a growing shortage of pharmacists, leading to the very recent announcement that CVS and Walmart are cutting their pharmacy hours in stores nationwide.

All that said, the industry looks bright in the areas of innovation and growth. There will be bumps along the way which include drug shortages, the staffing needed to get those drugs into the hands of patients, as well as the overriding need for manufacturing of drugs, personal health devices and other health equipment to be as efficient as possible. A management consulting firm can help them get there.

Augmenting the Life Sciences industry

At USC Consulting Group, we are operations management consultants who specialize in helping manufacturers, including those in healthcare and life sciences, transform their operations and processes into lean (or Lean) and mean operations, functioning at optimal efficiency levels.

Looking at the current life sciences trends, it’s clear that the M&A push along with supply chain and manufacturing challenges require some introspection of operations management industrywide. With M&As comes due diligence prior to any deal, then the blending of processes, procedures, and even equipment and facilities after the acquisition. Managing that is an enormous job. Combine that with staffing woes and continued supply chain disruption, and it’s easy to see the urgency for efficiency in operations.

Our goal is to improve business performance by increasing productivity and throughput, reducing costs, eliminating waste, improving quality and leveraging existing assets.

To get there, we will typically focus on Lean Six Sigma methodologies, including:

• Reduced Waste: Aggressively minimizing or eliminating anything that does not add value
• Just Right: Right venue, right conditions, right resources
• Self-Sustainment: Culture of improvement without continuous top-level instigation
• Protected: Anticipation of unpredictable and fluctuating demand
• Cost-Management: Provide your organization with the ability to better manage the cost component of delivering quality patient care

One key element in our approach that you may not find elsewhere: We get onto the floor and partner with your employees, the people who are doing the job day to day. We also involve your upper management and C-suite execs to achieve success with a top-down and bottom-up approach.

Whether the end product is high-tech medical devices or branded pharmaceuticals, life sciences companies have much to gain from kicking their manufacturing efficiencies into high gear. This marketplace demands it. The race for innovation is high, and companies need to develop and manufacture product quickly to avoid being left behind.

Our extensive experience in life sciences has helped countless companies implement business intelligence solutions to increase productivity, reduce labor, lower overall operating costs and improve yields and product quality. Our particular expertise covers the clean room environment, packaging methods ranging from multivac to hand assembly, and pharmaceutical delivery methods such as liquid, suspension, gelcaps, tablets and softgels.

We’ll work at every level within your company to deliver improvements that net substantial savings. And we’ll leave you with the knowledge, tools and technology to sustain those improvements over time.

Contact USC Consulting Group today to infuse life back into your operations.

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When two companies engage in the mergers and acquisitions dance, negotiating price and signing a letter of intent is simply the start of the process. What follows is arguably the most important and time consuming step in an M&A deal: due diligence.

Due diligence allows the buyer to confirm that all of the information the seller has given is truthful and accurate, while also gathering further information that may not have been discussed. Verifying important variables like current contracts, getting an in-depth look at financial statements, and taking a look at customers are all key pieces of information that helps a business close the deal with confidence.

Read on to learn more about the due diligence process, and why it is a crucial component in mergers and acquisitions.

Why is due diligence important for private equity firms?

USC Consulting Group regularly performs due diligence deep dives for our Private Equity clients to discover the “truth” behind a company’s curtains. In pulling back those curtains, we’ve discovered that some businesses trying to be acquired fabricate their earnings and production numbers to seem more appealing and drive a higher selling price.

Performing due diligence exposes the real numbers of a potential acquisition. This process not only confirms that all of the information the seller has provided is accurate, but it also allows a buyer to verify any other important variables that may not have been discussed.

Here are some of the steps we take in performing due diligence for our clients.

Important steps in due diligence

Due diligence is a complicated process which can take anywhere from a few weeks to two months or more. Therefore, it’s important to hit a number of key benchmarks to make sure the process goes as smoothly and quickly as possible.

Gather the right team

A full due diligence analyzation requires looking over a multitude of the seller’s documents. These can range from financial reports to real estate holdings to sales figures, and anything else pertinent to the deal. You need people who can make sense of it all. Making sure you have members on your team who can properly understand and analyze these documents is crucial for establishing a clear picture of the seller’s business health.

Establish goals

Think about your corporate goals. What data is most important to you? What information do you absolutely need to verify? If some aspect of the seller’s business doesn’t meet expectations, what variable would constitute a deal-breaker?

Establishing goals before beginning a due diligence assessment serves as a compass of sorts to navigate your company through all the data and find what is most important for your corporate goals.

Gather and review important documents

This step is the meat of the due diligence process: gathering important documents from the seller and analyzing them with your team.

The exact documents you’ll need vary based on industry and type of merger or acquisition, but more often than not this will include financial statements, real estate or lease information, insurance, manufacturing operational data, and anything else that the buyer deems pertinent. Things to look for, specifically include:

• Financial performance
• Operating production numbers
• How are the margins?
• The reasonableness of future projections
• How much it takes to actually run the company
• Outstanding debt
• Patents and other intellectual property
• Any legal matters that are unresolved
• Employee information like benefits, raise and pay structure, bonuses
• Environmental issues

This step goes hand in hand with gathering the right team, because it is important to have people in your company that know how to properly analyze and highlight important aspects of these documents.

Not just the what, but the how

Proper documentation and verification is vital. But it’s also important to take into account how they are being provided to you. Is the seller taking a long time delivering documents? Do you have to ask repeatedly? Are the documents arriving with inconsistencies or otherwise incomplete? Huge red flag. Conversely, is the seller being extremely cooperative, sending documents in-full and on time? Take note of the behind-the-scenes behavior of the seller to get a full picture of the company.

Re-evaluate information with your strategic goals

After all of the information provided by a seller is adequately analyzed, the final step for a buyer is to determine how to proceed.

How did these documents align with your strategic corporate goals that were established before the due diligence process? There may have been unexpected variables discovered during the process, both good and bad. Refer back to your corporate “compass” to determine if these should hold weight during your decision. Overall, does your team agree that it is wise to continue? Or was there something unearthed during the process that gives you pause?

USC can be your partner

Performing a successful mergers and acquisitions process is extremely complicated; this is just the tip of the iceberg. It requires the right team giving you the right information. At USC Consulting Group, we can help you paint a clear and realistic picture of the considered portfolio addition to help you make a confident decision about the future of your company. Whether performing due diligence efforts or improving the productivity and efficiency of a business already in your private equity portfolio, USC can help you.

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From supply chain disruptions to fluctuating demand, the past few years have caused a ripple-like wave of challenges throughout businesses across the globe, including the oil and gas industry.

Fortunately, with oil prices bouncing back, the oil and gas industry has nearly recovered from the issues to pre-COVID operations. That being said, there are a considerable number of concerns on the forefront of the industry that will shape the course of operations for years to come.

So, what’s the state of the oil and gas industry today? Let’s look at some of the issues and opportunities they’re facing.

Production capacity concerns

For months, we’ve been seeing news reports about the Russia and Ukraine conflict. Many of us have been seeking updates on the conflict itself, but those in the oil and gas industry have no doubt kept a keen eye on how it is affecting the global oil and gas market.

The sanctions placed on Russian oil have caused strain on a U.S. refinery system that, like so many manufacturing industries, was already overwhelmed and under-staffed following the COVID pandemic and the Great Resignation that followed. Demand for gas plummeted during a time when the majority of the country stayed in their homes for months on end, which left a large number of refineries with no other choice but to close their doors.

Refinery numbers still have not yet rebounded, which has resulted in a refining shortage of roughly one million barrels of oil a day compared to pre-COVID numbers. Add in sanctioning one of the world’s biggest oil producers, and the increased demand coupled with reduced refining capabilities combines into the perfect storm for shortages and increased prices.

Mergers & acquisitions opportunities

Despite the recently tabled climate bill, this country (and the world at large) is moving toward a renewable energy future. Even if it’s at a snail’s pace.

This has caused leaders in the oil and gas industry to evaluate operations and find ways to meet renewable and decarbonization efforts in the next few decades. One option is partnering with or purchasing renewable energy companies.

Companies like BP, Equinor, Respol, and PKN Orlen are leading the charge in renewable energy investment opportunities, and are reaping the financial and ecological rewards of doing so. Expect many major players in the oil and gas industry to continue to expand their portfolios and increase their outreach with strategic mergers and acquisitions into renewable energy.

Appeasement of investors

Despite incredible year-over-year growth, the oil and gas industry as a whole has been plagued with cash flow issues that have caused investors to reconsider their financial plans.

There are a host of reasons why investors have turned their focus toward other industries in recent years: Some have been leaving due to increased concerns over carbon-mitigation and ecological issues, some have left due to oil and gas’s tendency to overspend cash flows in the name of company growth and continued investment, while others have been scared away due to plain uncertainty.

Whatever the case may be, oil and gas companies are seeking to attract investors again, while investors want to see predictability and consistent returns to shareholders. The aforementioned increase in renewable mergers and acquisitions opportunities is a step in the right direction for the oil and gas industry, and that coupled with an inevitable stabilization will no doubt cause investors to flock back to the industry.

Outdated infrastructure & opportunity for innovation

Across the board, oil and gas infrastructure is aging.

In the off-shore sector, oil platforms are becoming old, deteriorated and increasingly at-risk for operational failures and natural disasters. This, of course, poses a problem not only for oil and gas companies meeting the ever-growing demand of the marketplace, but also risks ecological disaster in the form of oil spills and other malfunctions. Equipment and structural deterioration is no doubt due to saltwater and other environmental factors that come with operating in the ocean, and improvements to such facilities come at great expense, leaving some executives to employ a “we’ll-fix-it-when-it’s-broken” approach.

On land, plants and refineries across the country are aging, too, with many having outdated control loops, absences of updating engineering controls, and lack of complete computerization. This, of course, doesn’t even touch on the efficiency potential that technological aspects like robotic automation, artificial intelligence and IoT advances could bring to these facilities.

We can help

No matter the challenges, issues or opportunities facing the oil and gas industry, one solution is getting the job done more efficiently. That means looking at supply issues in new ways, casting an eye toward structural improvements and ensuring your day-to-day efficiency in the refineries and out in the field. We can help with that. At USC Consulting, we’ve been working with companies in a wide range of industries to up their efficiency game for more than 50 years.

Contact us today if you’d like to talk about how we can help your business.

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Energy companies across the globe have been forced to change their operational approaches in response to an evolving energy marketplace. Crude oversaturation, along with the emergence of cost-effective alternative sources such as natural gas, has pushed per-gallon prices for gasoline and oil down considerably, according to research from the Energy Information Administration. Consequently, firms have found themselves engineering massive restructuring initiatives over the past two years, transforming their business verticals and on-the-ground workflows via mergers and acquisitions, all in an effort to remain prosperous in the low-price era, CNBC reported.

With this work completed, analysts expect more transactions to occur within the global energy space. However, this M&A activity will constitute the heart of portfolio consolidation programs aimed at catalyzing growth and bolstering production. How might this unfold?

Understanding the M&A environment
Many large oil and gas producers with balanced budgets are looking to increase efficiency at scale through tactical moves that allow them to net more acreage in high-yielding territory. At the same time, smaller organizations with considerable experience and drilling inventory seek to scale up through acquisition. This environment gives oil and gas giants such as Exxon Mobil the opportunity to acquire valuable assets located in prime drilling territory that requires little to no investment. RSP Permian, an independent driller based in Dallas, Texas, is an exemplary target for bigger producers hoping to consolidate through targeted M&A activity, according to Forbes contributor and energy journalist Claire Poole. The firm controls more than 500,000 acres of territory in the oil-rich Permian Basin, making the small yet well-established company an ideal acquisition for large organizations focused on solidifying their core operations.

Of course, RSP Permian is not the only viable asset on the market. A handful of other hardy entities are available for purchase. As a result, a significant number of transactions are likely to occur over the next seven months. By year end, the upstream transaction total may eclipse the $64 billion recorded in 2017, according to analysts at the oil and gas research firm 1Derrick.

Grasping the production impact
How will increased M&A activity affect production? Last year’s figures suggest improvement. Even as oil and gas companies swapped assets in 2017, crude production moved upward, especially in the U.S. market where companies exported record amounts of crude oil and petroleum products, the EIA reported. In short, a repeat performance is to be expected during this year of consolidation through M&A.

Oil and gas enterprises navigating this transaction-heavy territory should consider connecting with the industry experts at USC Consulting Group. With 50 years of experience, our consultants can help energy producers on both sides of the M&A equation achieve ideal outcomes. Not only will USC help streamline the M&A process, but they can help improve overall production and process efficiency focusing on areas such as asset performance management, predictive and preventative maintenance, throughput, reliability and sustainability, and inventory control. Contact us today to learn more.

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