Acquisition has become his company’s path to growth

Expansion plans for BioConnect CEO Rob Douglas means acquiring rather than hiring

7-minute read

Rob Douglas from BioConnect

Rob Douglas, CEO, BioConnect

BioConnect founder and CEO Rob Douglas has proof that, if done right, purchasing a company can offer you the quickest route to business growth.

In 2021, the Toronto digital security firm purchased Tennessee-based Medixsafe, which manufactures safes for paramedics and other medical professionals accessing narcotics. The acquisition made sense for BioConnect, which could apply its cloud- and network-based solutions to Medixsafe’s standalone units. BioConnect provides biometric devices that secure access to doors, cabinets, safes and digital systems.

Modernizing Medixsafe’s products with BioConnect’s modern access control technology turned out to be a perfect fit, Douglas says.

“We’ve generated about a 400% return on our investment in two years. It’s way beyond anything we expected.”

He adds that BioConnect would have been hard-pressed to enter the medical narcotic segment had it not been for the acquisition. “That’s a big financial investment and would have taken us years to penetrate it versus an acquisition that instantly gives us credibility in that space.”

Douglas partnered with BDC Growth and Capital to finance the transaction. BDC provided additional flexibility to the financing package to ensure the company had enough cash on hand to continue investing in its growth.

The experience has made Douglas a proponent of growing your company through acquisitions. “It’s a faster way to scale your business than by just continuously hiring people.”

He now plans to acquire a new company every year. In fact, Douglas completed his second acquisition in December 2023, purchasing Silent Partner Technologies—a company that provides tracking technology for vials inside safes. The technology rounds out BioConnect’s growing medical narcotics solutions.

“It’s going to allow us to take things to another level of growth,” he says.

Closeup on BioConnect telephone device

A set of 11 criteria helped land the right company

Acquisitions require considerable preparation. For Douglas and his advisors, that meant defining a set of criteria to find a company that best suited BioConnect’s needs.

Included in the 11-point list is that the company be 15-20 years old, which gives a tech innovator like BioConnect an added advantage.

“Essentially, we buy longstanding technology companies and then migrate them to our latest technology platform, to ‘SaaSify’ their business,” he says, referring to the software as a service sector. “We look for firms using mature technologies from yesterday to solve problems. They usually need millions of dollars to build the next generation for their platform.”

He also looks for companies that are led by their founders.

“If the founder has been leading that business for over 20 years, they’re likely thinking about their succession. They also care about what happens to the future of their company and don’t want buyers who will just rip it apart. If they’re going to hand over their company, they want it to be somebody they can trust to take it to the next level.”

Growing your company through acquisitions is a faster way to scale your business than by just continuously hiring people.

BioConnect made sure new employees felt welcome

When the deal closed with Medixsafe, Douglas immediately flew to Tennessee.

“What the CEO does speaks volumes,” he says, adding that it was important to reassure Medixsafe staff that they would have a home in the company that just bought them up.

“We made sure every employee felt like they had come into an environment where they could develop.”

Numerous meetings with Medixsafe staff took place and employment agreements were updated. Company-wide meetings were held over the next few months and the Tennessee location’s accomplishments were highlighted.

“We were putting a spotlight on the Medixsafe team and how we were finding success together.”

The day you acquire a company, you should already have determined what the first 90 days will look like to bring the companies together professionally.

Integration needed a dedicated employee and a playbook

For Douglas, there are two essential actions to take when acquiring a company:

  • The parent company needs to dedicate one of its employees, whose only job is to integrate the new company.
  • A post-merger integration playbook outlining the first 30, 60 and 90 days must be created and followed meticulously.

“The day you acquire a company, you should already have determined what the first 90 days will look like to bring the companies together professionally.”

For BioConnect, that meant moving a senior staff member from their everyday tasks and having them dedicate themselves to the transition.

“We removed them from their role and made them the integration executive. They were responsible for overseeing all aspects of the project’s plan,” Douglas says.

Douglas says the importance of that role can’t be underestimated, especially in the first 30 days, when every day is crucial. “There’s a lot that goes on to successfully make the transition, and, to me, dedicating a senior person to that puts you on a successful path.”

Included in that senior person’s tasks were communicating with all relevant stakeholders, meeting the financial objectives and ensuring continuity for the two companies.

Rob Douglas chatting with a BioConnect male colleague

This acquisition came from an existing partnership

Companies seeking out future acquisitions may want to look at their current partnerships. That’s what Douglas did.

BioConnect and Medixsafe were already partners, which facilitated the acquisition. “I’m always looking at our partner ecosystem through that lens,” says Douglas, who says CEOs should build a pipeline of partnerships as a way to scout those businesses.

He recommends that CEOs and their advisors build a strategy around acquisition and then focus on the particular companies that will allow them to grow.

Rob Douglas’ must-haves for an acquisition

Third-party advisors

Douglas advises companies to hire someone with experience in mergers and acquisitions. “Third-party advisors will help you with skills you likely won’t find internally.”

A clear path for the acquired business

“You need to know what you intend to do with the acquired company,” Douglas says. You also need to reassure them of a place in the reconstituted business. Douglas went to great efforts to onboard and communicate with Medixsafe employees.

A post-merger integration playbook for the two companies

A playbook, spelling out how the company will be integrated, with 30-, 60- and 90-day milestones, is a necessary tool. “You need to have that playbook, with a methodology you follow religiously.”

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