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How much is my business worth? That depends. Of course it depends on profits, sales, EBITDA, and other traditional valuation metrics. A surprisingly important factor, however, is how you choose to sell it. If I could share with you how you could realize at least 20% more for your business w

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

ould you read the rest of this article?

The way to achieve the most value from the sale of your company is to get several strategic buyers all competing in a soft auction process. That is the holy grail of company valuation. There are several exit or value options. Let's examine each one sta

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

rting with the lowest which is liquidation value.

Liquidation Value - This is basically the sale of the hard assets of the business as it ceases to be a going concern. No value is given for good will, brand name, customer lists, or company earnings capability. This is a sad way to exit a bu

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

iness that you spent twenty years building.

Book Value - is simply an accounting treatment of the physical assets. Book value is generally not even close to the true value of a business. It only accounts for the depreciated value of physical assets and does not take into account such things

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

as earnings power, proprietary technology, competitive advantage, growth rate, and many other important factors. In case you are working on a shareholder and looking for a methodology for calculating a buy-out, Book value is a terrible metric to use. A better approach would be a multiple of s

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

les or EBITDA.

Unsolicited Offer to Buy from a Competitor - This is the next step up in value. The best way I can describe the buyer mindset is that they are hoping to get lucky and buy this company for a bargain price. If the unsuspecting seller bites or makes a weak counter offer, the comp

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

etitor gets a great deal. If the seller is diligent and understands the real value of his company, he sends this bottom-feeder packing.

Another tactic from this bargain seeker it to propose a reasonable offer in a qualified letter of intent and then embark on an exhaustive due diligence proc

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

ess. He uncovers every little flaw in the target company and begins the process of chipping away at value and lowering his original purchase offer. He is counting on the seller simply wearing down since he has invested so much in the process and accepting the significantly lower offer.

Buyer

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

Introduced by Seller's Professional Advisors - Unfortunately this is a commonly executed yet flawed approach to maximizing the seller's transaction value. The seller confides in his banker, financial advisor, accountant, or attorney that he is considering selling. The well-meaning advisor wil

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

l often "know a client in the same business" and will provide an introduction. This introduction often results in a bidding process of only one buyer. That buyer has no motivation to offer anything but a discounted price.

Valuation From a Professional Valuation Firm - At about the midpoint

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

n the value chain is this view of business value. These valuations are often in response to a need such as gift or estate taxes, setting up an ESOP, a divorce, insurance, or estate planning. These valuations are conservative and are generally done strictly by the numbers. These firms use seve

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

ral techniques, including comps, rules of thumb, and discounted cash flow. These methods are not great in accounting for strategic value factors such as key customers, intellectual capital, or a competitive bidding process from several buyers.

Private Equity or Financial Buyer - In this envi

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

ronment of too much money chasing too few deals, the Private Equity Groups are stepping up with some surprisingly generous purchase deals. They still have their roots as financial buyers and go strictly by the numbers, but they have increased the multiples they are willing to pay. Where two y

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

ars ago they would buy a bricks and mortar company for 5 X EBITDA, they are now paying 7 X EBITDA.

Strategic Buyers in a Bidding Process - The Holy Grail of transaction value for business sellers is to have several buyers that are actively seeking to acquire the target company. One of the lu

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

ckiest things that has happened in our client's favor as they were engaged in selling their company was an announcement that a big company just acquired one of the seller's competitors. All of a sudden our client became a strategic prized target for the competitors of the buying company. If f

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

r no other reason than to protect market share, these buyers come out of the woodwork with some very aggressive offers.

This principal holds as an M&A firm attempts to stimulate the same kind of market dynamic. By positioning the seller as a potential strategic target of a competitor, the ot

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

her industry players often step up with attractive valuations in a defensive posture.

Another value driver that a good investment banker will employ is to establish a strategic fit between seller and buyer. The advisor will attempt to paint a picture of 1 + 1 = 3. Factors such as eliminating

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

duplication of function, cross selling each other's products into the other's install base, using the sellers product to enhance the competitive position of the buying company's key products, and extending the life of the buyer's technology are examples of this artful positioning.

Of course

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

the merger and acquisition teams of the buyers are conditioned to deflect these approaches. However, they realize that their competitors are getting the same presentation. They have to ask themselves, "Which of these strategic platforms will resonate with their competitors' decision makers?"

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

As you can see, the value of your business can be subjectively interpreted depending on the lenses through which it is viewed. The decision you make on how your business is sold will determine how value is interpreted and can result in 20%, 30%, or even 40% differences in your sale proceeds

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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The profit of China is not only on its benefits in wages. It also profits from a large trained and dynamic workforce, propinquity to inexpensive quality resources, and encouraging government policies, such as subsidized lines of credit and exchange rate manipulation. These aspects, jointly in low wages, will create China, the most chosen supplier for many retailers, particularly after 2008, when the likelihood the United States to impose safeguards on Chinese products is removed.

Workplace problem children - everybody has them. From Dwight on The Office to the entire cast of characters in Office Space, these leadership challenges have even found their way into popular culture. Unfortunately, they are all too real in the modern workplace. Whether as legacies left behind by a previous leader or new hires that were not evaluated during the interview process, these individuals can undermine your leadership efforts unless you act.

Learning to qualify prospects early in the sales cycle is one of the biggest challenges sales professionals face today. Pursuing non-qualified prospects cost sales profesionals and the companies they represent thousands of dollars in commissions and revenues each year.

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