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Alternative Buyer Research Report and Acquisition Road Map

Terrell McGhee

MBA-699

Strategic Opportunity Mgmt

SNHU

12/11/2022

Introduction

In readiness to sell our Life Science Organization in the Midwest, this paper evaluates the alternative potential buyer as a contingency plan should the original buyer bolt out. The VP president of our organization has identified some potential buyers; as such, this report evaluates these buyers to identify one acquirer that will enable our organization to implement an exit strategy. To achieve the objective and meet the expectations of our VP, this report will focus on one potential buyer to identify its operational capacity, strategic goals, financial clout, and industry competitiveness. Based on the analysis done before to identify the companies in the pharmaceutical and medicine industry based on the NAICS code, this report proposes Johnson &Johnson as the potential alternative acquirer of our organization. To reinforce the acquisition plans, this report will also formulate the road map highlighting the steps and measures to ensure a successful exit strategy for our Life Science Organization in the Midwest.

Alternative Buyer Analysis- Johnson & Johnson Company

Current Market

Johnson & Johnson is an American multinational pharmaceutical, medical device, and consumer packaged goods manufacturer headquartered in New Brunswick, New Jersey. The company has grown to become one of the largest healthcare companies in the world, with operations in over 60 countries (Johnson &Johnson(n.d) 2022). Johnson & Johnson is well-known for its consumer healthcare products, including Band-Aid bandages, Listerine mouthwash, Neutrogena skin care products, and Tylenol pain relievers. The company also has a strong presence in the pharmaceutical and medical device industries, producing drugs to treat diabetes, HIV, asthma, arthritis, and other medical conditions and medical devices such as contact lenses, hip implants, and heart stents. The company has an extensive portfolio of pharmaceutical products, including treatments for cancer, diabetes, and infectious diseases. Johnson & Johnson is also a leader in developing novel therapies, such as gene and cell therapy. Over the past few years, Johnson & Johnson has invested heavily in developing new treatments for various diseases. For instance, the company has a footprint in digital health, developing products such as connected medical devices and digital health solutions.

Johnson & Johnson serves a wide range of customers in both the consumer and healthcare industries. Consumers of Johnson & Johnson products include individuals, families, and retailers. In the consumer sector, their products are sold in supermarkets, drug stores, mass merchants, and other retail establishments. Their customers include hospitals, healthcare professionals, managed care organizations, the government, and other healthcare providers in the healthcare sector. Johnson & Johnson also sells products to large wholesalers, distributors, and manufacturers.

Financial Analysis

Johnson & Johnson's capacity as an alternative acquirer of our Life Science Organization in the Midwest is evidenced by its financial powers. According to the company's income statement for the year ended 2021, it generated a total revenue of $ 93.775Billion which was a 13.55% growth from the prior year, and a total operating cost of $ 41.144 billion. The company's net profit margin for the same period was 22.26%, and the basic earnings per share of $ 7.93. Besides the income potential, it is also essential to consider the balance sheet position of the potential buyer to understand its solvency and liquidity positions which are the engine of the organization's success (Johnson & Johnson Financial Statement, 2021). The 2021 balance sheet of Johnson & Johnson company shows a total assets value of $ 182.018Billion which comprises current assets of $ 60.979 billion. The company's current liabilities for the same period were $ 45.226 billion; thus, when divided with the current assets gives a current ratio of 1.35, implying that the company has a strong liquidity position. The solvency position of Johnson & Johnson company is also stable since its long-term liabilities of $ 62.769 are less than its equity of $ 74.023 billion.

Recent Developments

In 2021, an investment of 14.7 billion dollars was made in research and development, which reflected the organization's commitment to generating life-enhancing technologies and creating value through collaborations that will radically impact the trajectory of health for humanity. One of the most recent projects of Johnson& Johnson Company has been the development of Covid -19 vaccine (Patel,2022). The company partnered with the Biomedical Advanced Research & Development Authority of the USA human and health services department to develop a $ 1 billion Covid 19 vaccine. In the financial year 2021, the company advanced its products line through submission for approval to the regulatory agencies. Some of its novel products include the Covid-19 Booster shot and the BYANNLI, a drug for the treatment of Schizophrenia in adults.

Buyer Rationale

The capacity of Johnson & Johnson Company to buy our life science organization is epitomized by several success areas of the organization. Johnson & Johnson has a solid financial position with high-income potential and a strong balance sheet. Besides, the company is one of the most successful pharmaceutical companies globally, with a firm grip on the market, as shown by its pervasive product portfolio and operational departments (Shay,2021). The company has many operational segments such as immunology, oncology, Neuroscience, and pulmonary hypertension, and increased research R&D makes Johnson & Johnson the most potential buyer of our Life Science Organization in the Midwest.

Acquisition Road Map

To ensure that our organization's exit strategy is successful, the company management has committed to a systematic approach guided by several implementation approaches. Our organization's acquisition roadmap started with the constitution of the strategic team of the organization's employees to spearhead the process and guide the VP. This stage was followed by the selection of the members of the guiding coalition and preparing them to understand the objectives of the acquisition and accept and lead the change process. More importantly, the strategic team took steps to look for, evaluate and select the potential acquirer of our company. To avert the looming bolting out of the initial buyer, the VP provided another list of potential buyers based on the guidelines of the NAICS. Against this backdrop, an acquisition roadmap is to be prepared to provide more insight to the VP of the organization to implement the exit strategy. Other steps that have yet to be started and which will be part of this exit strategy include, among others, negotiation with the selected buyer, signing of the acquisition contract, training the employees to prepare them for the exit, and finally, the implementation of the exit strategy. All these activities and their proportion of completion are presented in the Gantt Chart.

Gantt Chart with an acquisition road map

Select a period to highlight at right. A legend describing the charting follows.		Period Highlight:				Plan Duration		Actual Start		% Complete		Actual (beyond plan)
	PLAN START	PLAN DURATION	ACTUAL START	ACTUAL DURATION	PERCENT COMPLETE	PERIODS
						1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16	17	18	19	20	21	22	23	24	25	26	27
[Example: Form Strategic Planning Team]	1	1	1	2	75%
[Form guiding coalition]	2	1	2	1	100%
[Create change management strategy]	2	2	3	2	100%
[Perform industry analysis]	4	2	2	2	100%
[Current buyer and alternative buyer analysis]	6	1	4	2	100%
[ Top competitors research]	8	1	8	1	100%
[Select the best potential buyer]	10	2	10	2	100%
[Create a contingency plan]	12	2	12	2	100%
[Pitch acquisition to Johnson & Johnson]	13	2	x	x	75%
[Contract negotiation]	14	14	x	x	x%
[Signing of the acquisition agreement]	16	2	x	x	x%
[Preparing the employees for the exit]	19	1	x	x	x%
[Finalization and integration]	22	22	x	x	x%

Our next step in our exit strategy is to present our agency to Johnson & Johnson Company, one of the potential buyers, in the hopes that they will decide to acquire us. The board of directors will oversee doing research and developing the proposal that will be presented to Novartis. This should take a little time as our company has already presented itself to another potential acquirer; nonetheless, the agency will need to update the firm's financials and modify the pitch to appeal to the new desired buyer. Based on our estimates, we can provide Johnson & Johnson Company with one to two months to evaluate our offer and provide feedback before we jumpstart the final exit strategy steps.

References

Company overview: Johnson &Johnson(n.d).Retrieved December 5, 2022, from:

Patel, R., Kaki, M., Potluri, V. S., Kahar, P., & Khanna, D. (2022). A comprehensive review of SARS-CoV-2 vaccines: Pfizer, Moderna & Johnson & Johnson.  Human Vaccines & Immunotherapeutics,  18(1), 2002083.

Shay, D. K. (2021). Safety monitoring of the Janssen (Johnson & Johnson) COVID-19 vaccine—United States, March–April 2021.  MMWR. Morbidity and mortality weekly report,  70.