By 2006 the handwriting was on the wall for Philom Bios. The company was continuing to grow and expand and had already been the target of a hostile takeover bid a few years earlier by a major competitor.
Such challenges couldn t be kept permanently at bay. In fact, continued success would only bring them faster.
There was also a key question of the company s responsibility to its shareholders, says Brooke Dobni, acting dean of the University of Saskatchewan s Edwards School of Business.
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When you have a hostile takeover bid, that s the market telling you your assets are for some reason undervalued, Dobni says.
So the management team at Philom Bios defined its objectives. What they needed most, they decided, was to change the scope of the business.
We came to believe that a critical component of this strategy was to either merge, acquire or be acquired by another like-minded entity, says Trevor Thiessen, then chief operating officer at Philom Bios.
Over the course of about two years the company began to quietly explore its options, and then approached Novozymes about purchasing the company.
It became clear that Novozymes was likely the best fit, says Thiessen, now president of Novozymes BioAg division. It was the company to place our small but growing business within.
According to Dobni, it s a textbook example of how to manage a transition for a startup company on both ends of the equation.
Dobni says there are two clearcut winners in this friendly acquisition of Philom Bios by Novozymes. First, Philom Bios retains a large degree of control over its own fate, while gaining the heft of a larger company.
Philom Bios now has access to a whole new type and level of R & D, Dobni explains. Philom Bios was quite a successful company, but it was still a smaller company. Now they can benefit from the
resources of a larger company.
Dobni explains that Philom Bios struggled for many years with the challenges any new company faces, such as how to fund research and how to tackle cash flow difficulties while establishing new markets.
Meanwhile Novozymes, Dobni says, is pursuing a strategy that’s a proven winner, by acquiring a company that s a leader in a sector that s close to its established core business activities, but that offers it new exposure and opportunities.
It s a good way to acquire new products, more market share and strategic market access, Dobni says. It s a common strategy because it s easy to do and gives you quick access to markets.
Beyond the nuts and bolts of an acquisition there s always the question of how well the two organizations will mesh in the end and Dobni says there are a lot of similarities between the culture of the two organizations. They make similar but not conflicting products. They both have a major long-term commitment to research and development. And they both focus on sustainability issues.
In the end, it s all about finding a good fit that s what organizations look for, Dobni says.