THE DIVESTMENT CAMPAIGN
Our Client – The Vendor
A long-established B2B distributor of specialised healthcare supplies used in the field of complementary medicine, Acuneeds services and supports practitioners of acupuncture and traditional Chinese medicine in Australia and New Zealand. Originally founded in 1985, the Business initially focused on importing and wholesaling premium acupuncture needles sourced from the world’s best manufacturers. In 2005 it was acquired by a new owner, who then extended the product range into herbal medicines and other supply categories used in ancillary health settings. In addition, they introduced co-sponsored CPD training seminars for health practitioners.
After 15 years of developing the Business, Acuneed’s owner began exploring the possibility of exiting by way of sale to a third party and spent considerable time working with Johnsons to determine an optimal go-to-market strategy. As part of that preparatory process, Acuneeds elected to forewarn one of its key suppliers about the potential divestment. Unexpectedly that party then tabled a preemptive offer for the Business. As such, instead of undertaking a comprehensive sales campaign on Acuneeds’ behalf, Johnsons accepted a more limited engagement to negotiate and secure formal Offer & Acceptance with the suitor and, thereafter, to facilitate an exclusive process of due diligence and legals through to settlement.
The Sales Strategy
In a normal end-to-end sales process, Johnsons would have conducted research to build a custom database of prospective buyers for our client. As a primary target segment, this would have included other Australian distributors of medical and ancillary healthcare supplies & equipment. In addition, Johnsons would have performed a ‘sweep’ of adjacent sectors such as online retailers of healthcare and alternative health products, health food wholesalers, and/or domestic manufacturers of health-related goods & supplies.
In this case, Johnsons acted on behalf of our client to qualify the preemptive offer submitted by Seirin. It was only after a careful screening process and the evaluation of risk related to negotiating with a single buyer that we could advise our client in support of deferring a comprehensive sales campaign to pursue the tabled proposal. Leveraging our experience in similar scenarios, Johnsons was able to help the parties negotiate a mutually agreeable term sheet from the basis of the original offer.
The International Buyer
Japanese company, Seirin Corporation, is a leading manufacturer and global supplier of acupuncture needles. As one of Acuneed’s key suppliers, the two Businesses share a long and close relationship. This acquisition represented a rare opportunity for Seirin to shore up its channel-to-market in Australia, while simultaneously making its first step into the world of wholesale distribution.
What Our Client Had to Say
“It was Johnsons’ prior experience in a similar deal with an overseas supplier as the acquirer that finally convinced me to engage them. In the end, they played a critical role in completing the sale. Looking back, I had no idea of the level of detail and expertise that would be demanded by things like negotiating a term sheet, undergoing due diligence, and completing legal contracts. Throughout the whole process, Johnsons managed the fine balancing act of getting the best result for Acuneeds and myself, while ensuring our relationship with our supplier and new owner stayed on track..”Georgina Talbot, Owner - Acuneeds Australia