Health & Medical
Synergy hunter
How Les Cross learned to assimilate acquired companies while growing DJO Inc. into an industry leader
By Leslie Stevens-Huffman
Smart Business San Diego | January 2009
Page 1 of 4
They say one man’s trash is another man’s
treasure. So as big players in the orthopedics device industry, such as Johnson &
Johnson, migrated away from rehabilitation and regeneration products, like knee
braces, in favor of higher margin surgical
implants, Les Cross, president and CEO of
DJO Inc., swooped in and acquired the
unwanted divisions.
Don’t look now, but Cross has built a pretty substantial business from the accumulated discards. In the past few years, DJO,
which had 2007 sales of $492 million, has
more than doubled its size and product
offerings, primarily through picking
through those unwanted pieces via mergers and acquisitions.
“A lot of the big companies view these
products as low end,” Cross says. “The
industry has been highly fragmented, with
many entrepreneurial inventors choosing
to move on after developing a couple of
products. It’s not a very exciting industry,
growing about 3 to 5 percent a year. All of
these factors have made M&A a desirable
growth strategy.”
But quick expansion by a midtier company through acquisitions can be risky, especially when you factor in DJO’s major
merger in November 2007 with $450 million ReAble Therapeutics Inc. After all,
without effective assimilation of newly
acquired businesses, CEOs can quickly
accumulate corporate debt while losing
customers, revenue and sometimes even
their jobs. But with five transactions under
his belt, Cross has learned how to buy companies without breaking them by executing
effective M&A assimilation plans that capitalize on all the possible synergies resulting
from the deal. His process begins with figuring out what his company can do with
the acquisition, handling the personnel
transition and then maximizing the cost
reductions that can come from bringing
businesses together.
