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If you have just decided to start the process of buying your first company or if you are a seasoned mergers and acquisitions professional, you as a business buyer, need to utilize a disciplined, structured approach to purchase the best business acquisition possible. This arti

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

cle will give you a shortcut to incorporating most of the elements you must have to systematically qualify and “bias” the business purchase negotiations in your favor with the business seller.

Buying a business is a “one off”, iterative process in that each purchase opportun

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

Examples of combination products may in

ty is unique and different with regard to its sense of urgency from the seller’s perspective. However, as each purchase situation is different, if you do many business acquisitions over time you quickly see that there are fundamental elements to the location, qualification an

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

negotiation processes of buying a business, that once learned, can be leveraged repeatedly from one business purchase opportunity to another.

Four Steps to Business Valuation and Purchase/ Sale Analysis

With the intent to be brief yet adequately cover all the important ele

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

ents of the business appraisal and deal structure steps of buying a business, we will only focus on these elements within the typical business purchase process:

1) Company Analysis Steps:

Review all information obtained from the seller as solicited in the buyer’s Letter of I

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

Combination pro

ntent or “LOI”: All financials, leases, insurance policies, tax returns, contracts, environmental reports, legal documents, retirement programs, inventory counts, patents, licenses, policies, customer lists

Adjust historical financial statements provided by the seller to re

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

resent profits that reflect actual business performance and exhibit correct asset and liability values

Compare adjusted financials to key, like industry, performance metrics

Evaluate all non-financial elements of the company Customer sales mix, customer retention rates, cust

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

mer locations, employee counts and performance metrics, landlord contracts and lease provisions, bank/financing relationships, key suppliers and critical product or service content and warranty issues…to name a few

Prepare a “zero-based” budget for the next 3 financial terms

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

including anticipated monthly cash flows for the business including acquisition debt service requirements

2) Business Valuation Steps:

Calculate an asset based approach to business value determination

Calculate a profit based approach to business value determination: This

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

will require use of capitalization and a wide variety of Discount rate elements based on: Projected real returns with inflation assumptions Industry growth factors and risk influences Management additions or deletions and compensation changes A wide variety of non- financia

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

factors and assumptions

Calculate a cost to replace company assets approach to business value Determination

Weight each of the business valuation methods for relevancy based on historical business performance, future performance assumptions, various non-financial aspects of

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

Following aspects would a

the business, the anticipated final terms of business purchase, the financial and human resources that will be available to take the company where you want it to go

3) Business Purchase and Sale Analysis:

Select specific assets and liabilities to be purchased

Identify a $ a

dd to the challenges in developing combination products:

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

location to each asset and liability you select

Analyze various means to purchase current debt obligations, consider seller contingencies

Rank each means to purchase current debt obligations and select the best for your constraints

“Run the numbers”: put together a monthly

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

and annual post sale cash flow analysis for both the business buyer and the seller. Emphasize positive cash flows for eventual seller presentation.

Test your proforma financials for possible seller “numerical exaggerations” or mistakes

4) Communicate Findings and Analysis t

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

Seller:

Your primary objective is to justify your desired company purchase terms in a professional manner, to maximize your credibility and foster constructive dialog with the seller

All findings and analysis should be proof read before presented to the seller

All document

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

tion should be organized in a professional, somewhat formal Format

The information should be introduced as a “starting point”, a basis of further discussion

Your data should include numeric analysis responses to anticipated seller Positions

Consideration should be made to h

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

Professional from academic institutions, pharmaceutical industries, health care indust

ve a professional, “non- buyer” present the findings

All documentation should be also used for future lender, key supplier, landlord and employee presentations.

Each presentation customized or fortified for the targeted audience.

(This step is where all your purchase “weapo

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

ns” are shown, but not necessarily used)

Purchasing a viable business can be a complex and emotional experience for both the business buyer and the seller. The business seller often has much of their life and money wrapped up in the enterprise and is looking for the long awa

.

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

ted “pay day”, while the buyer typically has an intense “opportunistic” disposition fueled by a “seek and conquer” methodology.

The more a business buyer can take the emotion out of the purchase negotiation with effective development and professional presentation of key fina

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

Companies that provide selfless information through particip

cial and non-financial justification content, the greater his probability of reaching HIS desired business purchase terms with the business seller. The business analysis and valuation steps in the business buying process are key components to reaching this ultimate objective

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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If your members, parents or donors wear clothes, watch t.v. or read books you have the beginning ingredients to a sweet recipe for a great year-round fundraiser.

The selection of a Merchant Service provider is of utmost importance to the owner of a small business. There is no doubt that it is necessary to have one. The use of credit cards is on the increase. The introduction of debit cards and the wide dispersal of ATM machines has made carrying large sums of cash a less and less attractive option.

Suppliers and advisors play a critical role in your business. Having a good understanding with them ensures success for your business. If they are aware of the vision of your company and feel satisfied in the association, they will go out of their way to make your business a success. This article addresses some issues related to dealing with suppliers and advisors.

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