Perspectives From Strategics — What’s on Your 2025 M&A, BD, and Corp Dev Agenda

Daniel O'Neill  0:05  
Dan, all right. Well, thank you everyone for joining us, and thank you LSI for putting on such a great event this week. Before we jump into the conversation, I wanted to do some quick introductions. I'll kick off with my intro, and then I'll also introduce the panel. I am Dan O'Neill. I am a managing partner and co founder of kx advisors. We are a growth strategy consulting firm. One of our focus areas is working with corporate strategy and corporate development teams on their inorganic growth strategy. So we do a lot of work thinking through where to play choices, target identification, screening and a lot of work around commercial due diligence, and so we spend a lot of our time working with professionals like we have on stage today. I've been working in the industry for 19 years, and in addition to advising clients on transactions, I've also participated in the few so I have great respect for our panelists, and think it's going to be a great conversation. I will go down the line introduce each one of these folks. So start, start with Pete chigori. Pete is the head of strategy and corporate development at CONMED. Pete's been there for 10 years. He's led over $1.2 billion in acquisitions for the company, helped, helped with their turnaround journey and their growth story. So at a very successful career there Pete, if leading strategy and corp dev wasn't enough, Pete also runs their US advanced endoscopic technologies business, which is primarily focused on interventional GI and prior to joining CONMED, you've got 23 years and venture capital investment banking, so it should offer some great perspectives. Helene, or sorry, Helen. Sorry. Helen, wall is the head of M and A at Carl Storrs. Helen started her career at Big Four consulting firm doing financial due diligence, but I think you spent the last 14 years at Karl Storz. You have been a very active investor the last five years. I think you've done 13 deals since 2020 a good mix of innovative strategic investments and also capability acquisitions like vertical integration. So looking forward to your perspective on the panel as well. And then finally, Nate Harrington. Nate has been with Philip since 2011 and I get that right. Nate's now the managing partner with Philips Ventures, where he also serves on the board of a number of portfolio companies. Prior to joining the ventures group at Philips, Nate was the head of business development for the imaging guided therapies business, and really helped to build that business out through acquisition. I think you led some of the spectronex, EPD Vesper medical deals, and then prior to Phillips, Nate had nine years at Boston Scientific and a variety of business development and marketing roles. So should be a great conversation. Looking forward to it before we jump into the questions. Just wanted to set the stage, so the four of us had a call last week. We talked a lot about wanting the session to be very practical and pragmatic for startups, entrepreneurs in the audience. And so we're going to talk a bit about how startups, early stage companies, can best engage with strategics. So we're going to get into things like, what are the best entry points and roles for strategic for startups to engage with companies like we have on the panel. We have three folks who are focused on deal making, but they all have different titles, and so not every company looks the same. So we're going to talk a little bit about how roles differ across different companies of shapes and sizes. And then I think one of the more interesting lines of questioning that we have is around what's important to strategic investors. How can startups and early stage companies best position themselves to address those importance areas when they're engaging with strategics? So that's what we'll cover. I think it's going to be a great discussion. I know the title of this discussion was, what's on the agenda for 2025 and so wanted to kick off by asking each of you, not not what's on the agenda, but how you develop the agenda, how you develop your M A agenda. And so I thought this would be a good way to start talking about some of the different roles that get involved in M A probably start with you, Helene, and we'll work our way around. So maybe talk a little bit about your role at Carl stores, what your role is in setting M and A agenda, how you interface with others in the organization, within strategy or the executive team or your business partners.

Helene Wahl  4:55  
Yeah. So at Carl stores, we have a global single. Centralized M and a function, and we have a preference for acquisition versus minority interest. And we don't have a BD function, but we have had some activities in partnerships at the level of the businesses. So we have a preference for early stage. We're quite unique in this way. And so in terms of agenda to answer your question, the M A is really there to help execute the corporate strategy, including the commercial strategy. So my colleagues in the strategy glue group in the US and global identify the growth strategy initiatives, and that is then the focus of M and A. So in that sense, we are programmatic.

Daniel O'Neill  5:52  
Great. Pete, sorry. Nate, maybe I'll go to you next. I think you have a slightly different perspective being in the venture corporate ventures group, maybe you could talk about how that differs in adventures role you have prior roles in business development within a business. Love to hear your perspective on this as well.

Nate Harrington  6:10  
Sure, and with an eye towards the questions you asked of Helene, how are strategies set, and where do the various different I'll call them functions that support the businesses, be adventures, be it business development, be it M and A, how does that all fit together, at least at Philips? And I think it's probably true for a good number of strategics. It's a little bit top down and it's a little bit bottom up. Ultimately, each of the businesses own their own strategy. And so I would say, M and A and ventures work closely with our business development functions, who, in turn work with those gems to know where the priorities are. Now when I say the top down part is not, not all your children are created equal, and so there are certain divisions or business units within the company where we'll want to double down more than others. And so it's, it's really sort of a combination of the the the businesses develop their own strategies, working closely with BD, and then investment functions, or M and A to execute the deals, investments being different that we help execute and source and and then we sit on boards, so we we have to communicate all well together. But ultimately, I look at myself as serving the business and what they need to do to achieve their growth strategies.

Daniel O'Neill  7:45  
Pete, you want to go next maybe, given that you're in a combined strategy in Corp. DevRel, love to hear how it differs at CONMED. And then maybe you could talk a little bit about, once you've set the agenda, how you communicate that with or to either startups or the investment banking community to, you know, share, share, what your goals are? Yeah,

Peter Shagory  8:07  
sure. So, you know, I think what is interesting is, is you got a diversity of size of companies here, and there are simulators, there are differences. I would actually say, you know, Phillips is very large. We're 1,000,000,003 of revenue. We're on the smaller side of Medtech, but we're a very diversified company, and that's just from our from our history and and yet our our strategy, our function, works very similar to what you called out Nate, which is the businesses really own their strategies. They you know, they're responsible for being the experts in their in their areas, but as a smaller company, we have the ability to just connect dots, I'd say more simply, just because we're smaller. So I hold both the strategy and M and A titles, and so I spend a lot of time with our businesses, clarifying strategy and just and really facilitating the process that we go through with our board to clarify strategy and communicate that through and that is integral to our activities on the BD side. So, you know, it's kind of easier, I think it's less difficult if you're wearing both hats, to be able to be integrated into that our BD effort is myself and three other people for the entire company. So we don't have BD resident in the business units. It's just us. And we kind of farm ourselves out to the business units, and we recruit people from those business units as we need them to develop acquisition opportunities. So, you know, we leverage ourselves through external parties, through investment banks. Is probably 25 investment banks they talk to regularly, and that creates an extended network of BD for us as well. And so the more that we dialog. Those investment banks and guide them on what's interesting to us and what's not relevant. We're kind of cultivating that network of bankers who are incented to bring us opportunities. And so spend a fair amount of time with private equity firms and venture firms and investment banks communicating our interests in general, and then leveraging that and bringing it back to the company. And, and we're also top up, top down, bottoms up. We have ideas of areas that are most appealing to us, but I get phone calls from reps in the field and they say, you know, I saw this product in the or it's really impressive. Can we take a look at it and and so we maintain a database of opportunities. And I wouldn't call BD so much a pipeline of opportunities. It's more a cultivation of a field of opportunities. And you're you're watching those, and you're seeing them grow over time, and and maintaining dialogs with those so

Daniel O'Neill  11:04  
great maybe, maybe a little bit of advice for the audience here around the best entry points, if they're thinking about engaging a Philips or stores or a CONMED, maybe Nate. I'll start with you this time. How should our audience, entrepreneur startups, think about engaging with a company like Philips?

Nate Harrington  11:21  
Sure, and I would also say, engage early and get yourself on the radar ultimately, as you probably figured out how strategies are, said, it's great to have some contact with someone eventually in the business unit, and you will usually get that way through either a ventures introduction or business development. We work fairly seamlessly together. If it's something which isn't in my bailiwick of expertise, I fast pass it on over to business development. But frankly, I think whichever route you take, and it's good to know this for different companies, about where to enter, I would say, say, from a venture standpoint, if you're looking for venturing, if you're looking for M and A, it's not going to be through M and A, perhaps surprisingly, at least at our our shop, it's going To be through BD, because they're working most closely, I would definitely say, engage early before you need money. It's always great to be on someone's radar and having a nice conversation and not in not looking for a check. And the other thing, which can be tough and why it may be not a bad thing to go through ventures, at least at Philips, is sometimes you're I find myself playing traffic cop and figuring out, who do I introduce to whom when it comes to some of the business development functions, and I think particularly in a place like Philips, where you will have very dissimilar businesses. You'll have the medical device disposables, you'll have big iron, you'll have monitoring, which could be inpatient to remote patient monitoring. We should be able to connect the dots. I hope that helped a bit? Yeah.

Daniel O'Neill  13:21  
I'm curious if there are any Just following up on that. What are some of the most common mistakes that you see when folks are engaging you feel others feel free to jump in here too.

Nate Harrington  13:31  
Yeah, I would say, I mean two things. One, at a conference like this, just categorically, look at your audience. Look at what they do. It's surprising how many invites I get for orthopedics or ophthalmology, for example, or just places where it's not relevant. So do your homework as much as you expect us to do our homework, and we might be aware, do your homework on that and don't necessarily over engage. I think it's very good to have timely engagements, either with BD or with ventures. I would say at Philips, BD is perfectly fine, and eventually, if it seems worthwhile, you will probably meet someone in the business unit itself, like a GM, depending upon where you are in your development and how much they want to be engaged. Sometimes it can be a little bit frustrating for strategics, where people are trying to come in through the window, the door, the chimney anyway, to try to get to a decision maker, I would say comfortably, so that if, if you're eventually engaging with BD, you're going to get on the radar, and the right people will will be aware, or at least should be aware. And sometimes you may not always get the answer you write, you. Want, but at least if you can get a fast answer or just say it's not time, but we want to stay in touch, go with that. We're trying to make things work for for all parties, and we want to manage expectations. Well,

Daniel O'Neill  15:15  
maybe go to Helene, any sort of pre work that you would recommend to folks who may are engaging Karl Storz ahead of, ahead of meeting with you and your team.

Helene Wahl  15:26  
Yes, I would mention, you know, the usual critical areas I run out your IP and your regulatory roadmap, and you know, your QMS compliance. Start thinking about commercialization. We come in early. But there's one area that I would really pay attention when engaging or that I pay attention, and I would hope the founders are ready, because we come in early, the cap structure is going to be quite important. So I would think about making sure we come in early. So really like seeds, and there might be family office, but not necessarily VC, or just starting with VC, so in the cap structure, just make sure you resolve all your shareholders dispute, and then with the VCs, just start the conversation. Of had the conversation before we engage, or I guess at around the time we engage, if you haven't had them, just because we come in early, the mass will look different that they might be expecting. So it's good to start clarifying this, otherwise the negotiations might become tripartite instead of bipartite, and that's not fun for me. And then lastly, on the cap structure, I think, you know, because we, we start, we engage early, and we like, I haven't mentioned that, but we like to do a structured deal. We want to make sure that we retain the talent, and the talent has a chance to not just the founders, but the talent has a chance to benefit from the transaction and can deliver the expected value when they're with us. So I would make sure you I would consider identifying the critical talent and giving them shares,

Daniel O'Neill  17:18  
Pete, anything that there in terms of pre work, or model, best models for engaging, yeah, so,

Peter Shagory  17:29  
you know, from a pre work standpoint, I think it's, it's such a great point that entrepreneurs are so focused on their story, and so focused on telling your story, which is really important, that there is a tendency to maybe not do as much homework on your buyers and understand, and there's a lot of information out there on strategics. And so I'm always impressed when someone knows, you know our business pretty well and where they may fit. And that's, you know, we're diversified business. So it's, it's easy for someone to perhaps make a mistake and they read something, that's okay, but anyone who's putting the time and effort into to see to know that we're we're a fit, I respect, you know, maybe just some advice, I think starting early is so important, because what I think a lot of entrepreneurs forget is that we're incredibly the company. The businesses are incredibly bandwidth constrained. They're worried they've got their own priorities. You've got, you've got So, so what may sound like a no, may just be, we've got five other priorities that we just have to do, and we, you know, may be interested, our obligation to the entrepreneurial community is to be as transparent as possible with no, this is not a fit, or it's interesting, but we need time, or this just isn't the right time for us. But if you're taking kind of a patient, long term approach to it, I think that's, you know, that's, that's what's best. There are a lot of companies that we've watched for a long time, and you say no or it's not the right time, you get to watch them. You get to see them do the things that they say they're going to do. And that builds credibility as well. So starting early, making sure that you understand that a no may just be, hopefully it's a clear reason. There may just be other priorities that happens a lot and don't create false urgency. There are just so many times when we hear, boy, you know, there's three other buyers, and you've got to move on this. And you're like, okay, and then they come back a year later, and it's a credibility loss. So don't create that false sense of urgency unless it's unless it's real urgency, right? But that's, I think that's really

Daniel O'Neill  19:52  
important, yes. So great advice. So sounds like having a really good understanding of potential strategic fit. Um. Which requires understanding more about the company and their strategic direction. That could be a good segue into, I'm assuming it's also helpful to understand your kind of preferred investment models and kind of your your kind of past investment philosophies. Maybe we could talk a little bit about that when it comes to your preferred models of investing, so be it M and A or minority investments. Love to hear a little bit about each of your approaches, and then How helpful is it for the startups engaging you to understand that in advance when going into the conversations. So maybe Nate, given that you have a unique role in a ventures group, love to hear a little bit about your approach and, and, look, you know, if you have the context, love to hear how Phillips came to, you know, develop a ventures group, and why they found that to be kind of strategically

Nate Harrington  20:54  
important, sure, sure, and, and having sort of gone on all ends of the spectrum, from investments, also managing through partnerships as part of the BD function, and obviously working through M and A and now ventures, I have to say, I love my BD job. You just get absorbed into everything. And I used to think it was the best job, until, actually, I moved on over to corporate ventures, where you really get to spend time with your companies and growing, growing them and seeing them de risk. And I think for those strategics which do have venture capital groups, it's really a chance for us and our mandate. And I think most strategics, but not all, have this sort of mandate that we only invest in things where we see a path to acquisition. And so for us, it's a chance to identify a company that we think is very promising. It gets us a seat at the table. We tend to be active with board director as well as observer seats and helping the company try to do the right thing. And I would say we also try to help them to do the right thing, not for Phillips, but to build the best company possible such that any acquirer would want to have it. I then look at my role as passing it on over to M and A, whether or not Phillips buys the company or not, in some ways, is not my problem. It becomes BD and them M and A to execute on that, and the value of seeing it go along the journey, making sure it doesn't go off the rails. There's not necessarily one right way to build a company, but there's, there's definitely some mishaps, and that's the beauty of having a really functional board. And I think it's very important to have good relationships with your with your VCs on the board, and gain that credibility and trust, at least from our perspective, and it really just gives you, from a strategic standpoint, a head up, heads up at the end of the day. If the company matures and develops the way that you'd like to see you wind up with a coupon at the end of the day, which puts you in a strong advantage. I could say, we don't go for any special rights when it comes to making our investments. And it's interesting, our investment thesis has changed a little bit over time, as Dan was alluding to we originally started out with doing corporate investments in areas that weren't business sponsored, and it was trying to predict a little bit of where the puck might be going and learning along the way, but they weren't necessarily business sponsored. We haven't found that to be as useful for resulting in M and A, which is the ultimate success in terms of a Venture Program, it's nice not to lose money and hopefully get good returns, even if you don't buy it. And so with the change in CEO, we've had that focus, as I mentioned, the mandate that we only invest in things that we acquire. And I think that's, it's an advantage that I think most strategics who have an investment arm do it. It's also a lot of work, and you have to be very patient and long term. And I think some strategics, I mean, it sounds great conceptually, but you need to remember that when you start to invest in company, these are the gifts that keep on taking. You have to be ready for your follow ups and doing the right thing by the company. But ultimately, I think it's a great tool that sets you up well. All for, hopefully the end game, which is acquiring the company, if it's promising.

Daniel O'Neill  25:07  
Pete, you spent a good part of your career in venture capital, and I think during our pre call, you talked about how CONMED has been more focused on, you know, M and A and 100% ownership. Wonder if you could just talk a little bit about the trade offs between the two models and why or how you're thinking about it at CONMED, yeah, and

Peter Shagory  25:27  
I'll be brief, CONMED as part of a turnaround, we've had to direct all of our capital to acquisitions, because that's what's going to move the needle. That's what's going to improve the company. We've not been an active venture investor, but maybe it's because I was a former venture capitalist and worked with number strategics. There's an absolute case for strategics being investors. And in fact, as the venture Medtech community pulled back in the 2010 2011 timeframe, the corporate venture community really stepped in and filled the void on capital. The objectives are somewhat, are different, right? Financial VCs are looking for returns. The strategics, you know, it's there's a different motivation to it, but the two can work hand in hand and be very successful. So I'd love to see CONMED be more active in the investment side of things, I think that there's a case for it. We don't have a fund we would invest off our balance sheet. It'll be select opportunities, but the important thing is to be committed to it over the long term. You can't just get in and out of doing that. You've got to be really committed to it over a very long period of time for it to pay off. And hopefully we'll have the chance to do that.

Daniel O'Neill  26:40  
And Helen you sounds like stores has a preference for 100% acquisition as well, but you also invest early. So talk a little bit about the philosophy at Carl stores and how you seek to minimize risk when investing early.

Helene Wahl  26:57  
Yes, I'll just briefly mention the three categories of acquisitions that we've done, because I want to talk about de risking. I'll specifically discuss that one category. So, so we've done some tactical vertical integrations, and we've done distributors, and the category where, I think the third one, where we are going to be more active near term, long term, I think it's really the strategic tokens and adjacent and we look at so these are tech and talent deals and early stage. And because we're privately owned, you know, we can do a full acquisition. We're not, we're not going to be hit, because we are privately owned, and we think in generations rather than in quarters. So we can get in, into these 100% acquisition however we're like to still de risk, of course, you know, we privately own, but the three shareholders really have an eye on the numbers. So we're very disciplined, and we put in place, you know, a classic model where structured pricing, so the payment of the of the purchase price is aligned with the delivery of the value, so a fairly decent upfront, but milestones based on what we know, we hope the talent and the founders will be able to deliver to make the transaction successful, and a little bit of earn out as well, so they can also benefit and stay with us for a long, longer term. And one thing I'd like to say to founders is we, we hope you stay long term through the execution of, you know, commercialization and success. But we also offer long term, long term careers. There's a lot of interesting businesses, so we actually now transitioning where things are being delivered and people, we are offering different activities to people who came from startups, who are interested in working for a larger organization, long term.

Daniel O'Neill  29:21  
Great. I know we're running up on time here, so rather than try to force one more question, maybe we'll seek the wrap up here. Just wanted to thank the panelists for all the insightful comments today. I thank the audience for coming and thank you, LSI for holding a great event. Enjoy the rest of the conference.