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Why investment in growing your commercial team should be part of your exit strategy
11 Apr, 20238 MinutesAn exit is the ultimate end-goal for many start-up leaders. Of the potential exit routes, m...

An exit is the
ultimate end-goal for many start-up leaders. Of the potential exit routes, more
than 16 times as many companies are acquired than go public.
Most acquisition
opportunities come fairly early in the growth of a start-up, often happening
between Series B and Series E funding rounds. If you are considering a buyout,
it’s important to carefully consider the team you have in place and look to
invest in the areas that will support the transition.
Over the last few
years there’s been a notable shift in buying activity, with a decrease in megadeals making way for an uptick in smaller
transactions, as well as commercial partnerships and collaborations.
If your business
strategy involves a merger or acquisition, it can be beneficial to hire
salespeople, marketers, and build out other commercial functions early on. These
are functions that are going to help you generate and demonstrate value – a key
indicator to potential buyers that your company is worth interest in.
Why building a commercial team makes sense ahead of an exit
When we think of a
commercial function, we might be largely thinking about sales teams and
marketers, perhaps due to their tangible link to your company’s bottom line.
This is a great place to start when looking to build out a commercial function
– they can strategise new ways to bring in revenue, and help ensure your company
remains successful and in perpetual growth both pre- and post-buyout.
By identifying your
target patient or HCP population and promoting your products, services, and
generating more sales, your marketing and sales teams are going to be the ones
directly increasing revenue and profitability – a key indicator of value that
potential buyers of your company are going to look at. The earlier in your
growth stage you can demonstrate the ability to generate revenue and provide
value, the earlier interest you could get from prospective buyers.
Your commercial
function is also going to be able to help create a positive image for your
company. By developing and implementing campaigns that effectively communicate your
value proposition and your brand message, they’re able to establish your
company as a leader in its industry and build trust with your target audience
as well as with your existing customer base – and with leaders and potential
buyers in across the life sciences industry.
All-in-all, the
support a commercial team can bring can be summed up in three areas;
Enhancing your market position and contributing to revenue growth
A strong commercial team plays a pivotal role in expanding
your presence in the market, driving revenue growth, and increasing
profitability. Creating demand, building relationships with healthcare
providers, payers and other stakeholders is exactly the remit of a commercial
team, and the impact of investing appropriately in the leadup to a buyout can positively
influence your market position at a time where it’s pivotal for you to be generating
value.
Demonstrating value to potential acquirers
As well as driving sales and revenue directly, a
well-rounded and efficient commercial team can effectively communicate the
value of your company's products and services to potential acquirers beyond
cash alone.
Done well, this not only showcases your ability to generate
revenue, but also signals the potential for future growth, making your company
an attractive target for acquisition.
Facilitating a smooth acquisition process
A knowledgeable and experienced commercial team can help
facilitate a smooth acquisition process by providing valuable insights into
market dynamics, competitive landscapes, and regulatory requirements. Setting a
solid foundation way ahead of a buyout can set a steady runway for commercial
operations once the deal has gone through.
All too often acquirers look to replace the commercial
function of a firm with that of their own, but the benefit of retaining the
original commercial function is that they can help identify and build on potential
commercial synergies between your company and the new acquirer. This makes the integration
process more seamless and efficient, and supports in establishing a commercial
strategy that works.
Specific commercial functions to build out
Although they’re important, it isn’t all about sales and marketing
alone – particularly as you get closer to an M&A deal. There are important
commercial functions you should look to engage at least on a freelance basis as
your firm grows; these teams might not impact your bottom line is as tangibly
as sales, but make the acquisition and post-acquisition smooth for your
leadership teams, for your buyers, and for those inside your organisation.
Sales and Business Development
It’s the bread and butter of a commercial strategy. Your
sales and business development functions are the driving force behind revenue
growth - by investing here, you can ensure that your company is well-equipped
to penetrate new markets, develop strategic partnerships, and negotiate
lucrative contracts.
This, in turn, can boost your company's valuation and make
it more attractive to potential acquirers.
Marketing
Going hand-in-hand with the sales and business development
activity is marketing. Effective marketing is crucial for creating awareness
and demand for your products or services across the life sciences industry.
A robust marketing team and strategy can help you develop
targeted messaging and campaigns that resonate with healthcare providers,
patients, and payers. By positioning your company and its products as market
leaders, your marketing team can help drive sales and increase overall market
share prior to an exit.
Market Access
Market access is a critical function in the life sciences
industry, as reimbursement and pricing strategies can significantly impact your
company's revenue potential and market share.
A dedicated market access team can help you navigate complex
regulatory environments, negotiate pricing agreements, and ensure that your
products are accessible to the patients who need them most. This can help
secure your company's position in the market, prove commercial viability in
global markets, and make the venture more attractive to potential acquirers.
Medical Affairs
Bridging the gap between scientific research and the
commercial effort, a strong medical affairs team can support your company by
engaging with key opinion leaders, providing scientific expertise to inform
commercial strategies, and ensuring the integrity of your clinical data. By
investing in this function, you can enhance your company's reputation and
credibility in the eyes of potential acquirers.
Legal and Compliance
You will also want to work with legal experts that
specialise in corporate transactions who can help you understand the
implications of a buyout or exit, navigate global laws and regulations if
applicable, and ensure that all necessary documents are in order.
Strategies for developing and growing your commercial function
Invest in Training and Development
To ensure your commercial team remains at the cutting edge
of industry trends and best practices, investing in ongoing training and
development is crucial.
This may include attending conferences and workshops,
participating in industry-specific courses, or providing access to online
learning resources. By continuously upskilling your team, you can maintain a
competitive advantage in the market and demonstrate your commitment to growth.
Encourage Cross-Functional Collaboration
Encouraging collaboration amongst the separate functions
within your commercial functions as well as the wider business can lead to more
innovative and effective commercial strategies.
By breaking down silos and fostering a culture of open
communication, your commercial team can gain valuable insights from their
colleagues in R&D, clinical operations, regulatory affairs, and other
areas, ultimately enhancing the overall performance of your company.
Leverage Data and Analytics
Data-driven decision-making is essential for success in the
modern life sciences industry. By investing in advanced analytics tools and developing
a data-driven culture, your commercial team can make more informed decisions
about market trends, customer preferences, and competitive landscapes.
This can help you identify new opportunities, improve
upon marketing and sales strategies, and increase your chances of a successful
acquisition.
Set Clear Goals and Monitor Progress
Establishing clear objectives and regularly reviewing
progress can help your commercial team stay focused on driving growth and
increasing your company's valuation. By setting measurable and attainable
goals, you can motivate your team to work towards a common vision, ensuring
everyone is aligned with your company's overall acquisition strategy.
Seek External Expertise
Sometimes, seeking external expertise can provide valuable
insights and guidance to help grow your commercial team. Partnering with
consultancies or industry experts can provide a fresh perspective on your
current strategies and help identify gaps and areas for improvement. For
support from a talent and scaling perspective, reach out to us here.
Investing in your commercial team is a key factor in
positioning your company for a successful acquisition. By
enhancing your market position, demonstrating value to potential acquirers, and
facilitating a smooth acquisition process, a strong commercial team can help
unlock your full potential.
Focus on building out crucial commercial functions like
sales and business development, marketing, market access, and medical affairs.
By doing so, you will not only create a more attractive acquisition target but
also lay the foundation for sustainable long-term growth in the life sciences
industry post-exit.