A Better Way to Put 2 and 2 Together

Company's transition team brings proven experience to major transactions.

Strategy and Strength|Jan.28, 2019

The Abbott of today is not the Abbott of 10 — or even 5 — years ago. And that's in part due to careful shaping through smart additions and important subtractions.

Wall Street has long noted the company's mergers and acquisitions track record, which highlights deep experience in finding strategic fits for its future, and positive results. Since January 2017 – when Abbott completed the acquisition of St. Jude Medical, its largest by value – the company's stock is up 85 percent.

Finding the best ways to put organizations together is a combination of business savvy and science. Abbott's dedicated integration team has found the best ways to handle corporate transactions of all types, using a decade of cumulative knowledge to make the Abbott Transition Organization (ATO) a competitive advantage.

For a company that's gone from $13 billion in sales in 1999 to more than $30 billion a year today, getting good at growing makes a real difference. Three out of four corporate M&A deals don't deliver on their financial promises, analysts note. Finding the best ways to create value, integrate deals quickly and avoid business disruptions created a clear business need for a team of seasoned leaders on the ATO team.

"We couldn't just pull people together from all around our company and disband them when the integration was over," said Frank Weitekamper, vice president, ATO. "We needed a core team of people who understand the entire integration process and appreciate the fact that M&A impacts all functions within a company. M&A integration is their expertise."

With more than a dozen acquisitions (and a few key divestitures) behind it, the ATO's track record since its 2007 inception speaks to Abbott's leadership depth. Abbott's market capitalization – the combined value of shares – has nearly quadrupled since 2013 when including the value of AbbVie (formed after Abbott separated its proprietary pharmaceutical business). As Abbott has reshaped through strategic transactions and prudent investments in the company's own research, the ATO has refined its approach and deepened its knowledge after each experience.

"Having a team with decades of experience doing this kind of work means a lot, and it gives us a rigor in this space that others don't have," Weitekamper said.

The ATO has been instrumental in the recent successful integrations of St. Jude Medical and Alere, both of which have contributed to Abbott's accelerated revenue and helped the company build a sustainable growth track record moving into 2019.

Helping Shape Tomorrow's Abbott

With a team of core members complemented by functional experts, the ATO is shaped like a mini-company on its own, with finance, information technology, human resources, commercial, operations and research functions. The ATO customizes its mix of specialty roles to mirror the company Abbott is acquiring. A steering committee guides the group as it tackles each new project.

"We're immensely selective when it comes to finding the right fit for Abbott," he said. "We use what we've learned after years of doing this to understand what will work best for our company today. That's how the ATO helps shape our direction."

Every transaction is different, but we're able to identify some commonalities from having a rigorous process and a dedicated team that works to integrate acquisitions in the best possible way. It's like keeping an airplane airborne while changing out one of its engines, requiring a blend of art and science to make it work.

"We're really looking at: What does Abbott have, what does the acquired business have, and then how can we achieve the best of both?" said Ann Johnston, a divisional vice president in Human Resources who has led HR in various integrations.

The ATO team works first to stabilize the business of the company being acquired and looks to install the right leadership team. Through open and transparent communication tactics, Abbott's ATO takes the time to listen and learn while formulating a precise plan to complete the transaction and then integrate it.

"We are building on our strengths to do things in healthcare that weren't possible before," Weitekamper said. "With every transaction, we refine our process, identify the best of both and capitalize on those strengths to grow what shapes the new Abbott."