[Image from istockphoto.com]
Guiding a company through a merger or an acquisition can test a CEO’s leadership skills. Here’s how NinePoint Medical CEO, Christopher von Jako, led his former medtech company, NeuroTherm, through a deal with St. Jude Medical.
When Christopher von Jako assumed the corner office at NeuroTherm in 2013, the company had gone through two other CEOs in a year’s time and was reeling from an FDA warning. And in his first week as the company’s chief executive, St. Jude Medical came knocking — they were looking to buy.
Von Jako is an M&A veteran: he’s been through five of them in his 25-year career in the medical device field. But just days into his time at NeuroTherm, he wasn’t ready to sell.
“I said, ‘Well, I just showed up here. I’m not ready to sell the company. We’ve got to fix some things and I think we can drive some additional value,” von Jako explained.
He told St. Jude that when NeuroTherm was ready to sell, he would approach them. But St. Jude, which was later bought by Abbott, was persistent. Eventually, von Jako hired a banker. A year and a half after joining NeuroTherm, he had inked a $200 million deal to sell the interventional pain management company and its radiofrequency ablation systems used to treat spinal pain.
Building, and retaining, value
In his first six weeks as NeuroTherm’s chief executive, von Jako set out to speak with every employee. He held group sessions with six employees at a time, to introduce himself and form a foundation of trust with his colleagues.
“I listened, I talked to everybody and set a vision for the company – where we were heading and how we were driving towards that,” he said. “I came out with specific objectives for us as a company after I arrived and then did the same thing again in January of 2014, as well. The goal was to bring everybody together.”
The company itself had experienced a lot of change in a short period of time. Just three years earlier, NeuroTherm was sold to a private equity company. Before von Jako, there were two CEOs. The second one came after the sale to the private equity company and left soon after joining. von Jako wanted to establish a sense of stability and unity among his employees.
“The first thing to do was to try and get the employees aligned on what we were trying to get done, so we developed a new mission statement and a vision statement. All those things brought the team together and made sure that people were doing the right things. It was a really rewarding experience,” von Jako said.
He assured them that he wasn’t interested in selling the company – because, at the time, he truly wasn’t.
“I tried to keep myself open and accessible. My door was open to all of my employees. I would set regular times for me each week to call the sales people in the field, out of the blue, to ask them how things were going,” von Jako said. “It’s amazing what we as a company accomplished in the one and a half years before the sale process actually went through.”
Over the course of that year, NeuroTherm moved the company’s facility, expanding their team to add an additional 40 employees. They worked on clearing up problems with the FDA and continued to build out their R&D capabilities.
And when St. Jude came calling again, this time von Jako agreed to hear their offer.
“The synergy between St. Jude Medical and us was obvious. They have a larger sales force. They’re in the same market space. They are a worldwide leading medical device company. They could do a lot with the products,” he explained. “They understood the value proposition that we had.”
By July of 2014, they had a deal. St. Jude would buy NeuroTherm and its spinal pain devices for $200 million.
Learning to keep a steady hand
von Jako knew from personal experience that when a company is sold, it can leave employees on the edge of their seats, wondering if they will still have a job when the dust settles. At the time of his first medtech buy-out, he was newly-engaged and his job wasn’t a sure thing.
“So every deal that I’ve done, I’ve always made sure that we’ve taken care of the employees because I knew selling to St. Jude meant that people may not have a job in the future,” he said. “I tried to empathize with them and I tried to set the company up so that people could land in the right spots.”
He had spent his year and a half as CEO building trust among the employees. Now, he was worried that it would fall apart once they found out he was selling the company.
“I tried to explain to them, ‘I really didn’t think we were going to sell the company this quickly. That was not what I had in mind and this is the best thing for the owners – and this is the way we move forward,’” he said.
“I think having good communication, understanding the employees, is important. Listening to them and empathizing with them and understanding what the situation is going to be. And making sure that it’s a good transition for a lot of the employees. I made sure that everybody in the company actually got something.”
Although some of NeuroTherm’s employees left, others ended up landing jobs within the newly-bought company.
“Where there’s change, there’s always opportunity,” von Jako said.
After five successful medtech M&As throughout his career, von Jako knows there are essential skills that all leaders need to navigate a buy-out. His top tip for any CEO is to maintain a degree of steadiness and stability.
“There are these incredible highs and lows throughout the process and you just have to stay as realistic as possible,” he said.
In addition to building a team of strong directors and managers, who von Jako credits with helping him close NeuroTherm’s successful sale, it’s also crucial to advocate for your employees.
“Make sure that the employees are going to be taken care of because you want to retain value on the other side,” he said. “You don’t want good employees to leave because that’s what the buyers are buying.”
“You want to make sure that you’re advocating for the people that really helped you out during the whole process,” he added, “because it’s just going to help the other company as well.”
