| Dr. Bob Rosenthal and Mike Mullen, formerly president and CFO of PerkinElmer's instruments division respectively, have teamed up with private equity firm Parthenon Capital Inc. (Boston, MA) to "build a world-class analytical instruments franchise" by acquiring private or public companies or their divisions. Together they have formed Magellan Discovery Technologies LLC (Boston, MA), which has over $76 million of committed equity, to target US or European companies with a minimum revenue base of $50 million and leaders in their markets with a strong intellectual property position.
In an interview with Instrumenta, Rosenthal said: "Magellan management will focus on strategy development and implementation, as well as the acquisition process and execution. It remains to be seen what level of day-to-day involvement will be required."
Magellan has highlighted a number of key instrumentation areas, including bioinstrumentation, automation, LC, GC, MS, XRF, molecular spectroscopy and electron microscopy. "The need for measurement tools is accelerating," said Rosenthal. "We believe that this will continue as the technology changes, improves and matures and instruments will become a tool to initiate change. Ultimately, this implies a different business model ... instruments must become knowledge devices; as this is accomplished, they will become far more pervasive and the way they are utilised will change as well."
Discussing how Magellan will compete against major suppliers, Rosenthal added: "We believe the instrument marketplace provides opportunities for all due to the niche nature and complexity of the market, technology and application structure. It is not our intent to try to build another multi-product company ... we believe that focus on a few areas will lead to greater success."
Rosenthal, who was formerly president of Nicolet Instrument Corp. and president and CEO of Thermo Optek, first worked with Mullen when Optek acquired Analytical Technology Inc. in December 1995 (see Instrumenta 12 (16/17) 1). He said of Mullen: "Mike has been in the analytical industry for 16 years and has a proven track record in raising capital, valuing acquisitions and integrating them, and has taken part in three IPOs. All of these skills are incredibly important to the success of Magellan."
Rosenthal added that he has learned valuable lessons from his time at Thermo Optek and PerkinElmer. "At Thermo Optek, we created autonomous units, segmented by core technology, which focused on specific areas of opportunity. We maintained a very thin corporate staff, which concentrated on M&A, reporting, mentoring and developing management, strategic goal setting and communicating with employees and shareholders."
He continued: "In the early 1990s, the industry was beginning its consolidation and one of the keys to successful consolidation was to achieve critical mass from a revenue perspective (around $100 million at that time) and own your distribution so that the acquired product could be plugged into the channel. It was thought that you could acquire a third or fourth player and grow the top line by taking market share. This model has changed dramatically and to ensure success, you are better off when you acquire a market leader.
Distribution is still important, but you do not need to be everywhere to be successful. Customers and the market reward those suppliers who provide the most value, have a focused strategy and supply the best quality product and support."
When asked about revenue targets for 2005, Rosenthal commented: "We would be disappointed if our revenues were not in the order of $500 million by this time. Management is a partner with Parthenon Capital and will be focused on creating value. We both believe that the best way to create value is to ensure that customer needs are met."
Instrumenta, PJB Publications, 18/20 Hill Rise, Richmond, Surrey, England, TW10 6UA. Telephone: 020 8332 8888. Fax: 020 8332 8998. Contents (c) PJB Publications Ltd 2001. Not to be reproduced. Permission to abstract or index this publication by any commercial information service must be obtained from Instrumenta. Publisher, Dr Philip Brown. Computer typeset and printed in England. ISSN 1471-0710 |
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