Today I had the privilege of attending the NJ Tech Council CFO Forum at EY in Iselin (Metropark), NJ. The featured speaker was Jim Mastakas (bio), the current Senior VP and CFO of Virtus Pharmaceuticals, and who previously worked at Amneal. Jim was there to speak about his time at Amneal and the deal he helped close with Impax Labs valued at approximately $7 billion.
Amneal was a private generic drug company that merged with Impax Labs earlier in 2018. Impax Labs was publicly traded company, but Amneal was the more valuable company. When the deal finally closed the split in ownership split was 75% Amneal and 25% Impax Labs, with the combined company retaining the Anmeal name and becoming a public company (AMRX). The deal was transformational for both companies as the combined company became the 5th largest generic drug company in the US, with expected revenues of $2.6 billion.
Jim talked about the challenges of getting the deal across the finish line and what he thought CFOs need to pay particular attention to. For a deal to close a lot of things need to go right and from an operational standpoint some of these are obvious. Some of the less obvious things a CFO needs to be aware of are:
- Making sure proper confidentiality was in place both externally and internally
- Knowing you will need to manage a CEO’s expectations when it comes to the numbers
- Assuming your company is like most, stretched pretty thin, being prepared to lobby for extra help in the due diligence
- Managing employees’ motivation in getting the due diligence completed. This can be done through compensation and because employees know there is someone who does a similar job on the other side of the transaction
- Making sure there is a person whose sole job is integration of the two companies so that those synergies are realized. You can expect this to be done correctly if this is a part-time job for a current employee, the person has to devote all of their time to this.
The one thing he would have probably done differently was not have updated Amneal’s forecast as frequently as he did. The reason for this was two-fold. First, a lot of time and effort was put into these forecasts every time they needed to be redone, time that he and his staff really did not have. Secondly, it could have possibly undermined the confidence that Impax had in the numbers since they changed so often. Ultimately, Jim did not feel that happened but felt it was a real possibility.
This was a great event and Jim did a wonderful job of walking through the transaction and what went down. Kudos to NJTC for putting it on and EY for hosting.