Making acquisitions can increase your size and your capabilities.
When Med-XS Solutions was incorporated in 1997, its goal was to provide the health care industry solutions for excess medical equipment by offering removal, storage and resale services to medical facilities. Over the past 10 years, Med-XS has grown significantly both in size and capability, acquiring several companies to complement its portfolio of services and further broadening its presence in the medical equipment management industry.
For Med-XS president Kevin Tenkku, the process of assessing a prospective acquisition’s potential benefits has become second nature.
“In the medical equipment sales and service market, we have been successful by constantly researching companies that offer at least one of the products in our portfolio,” Tenkku says. “Then we review if that company operates profitably while providing a superior customer experience.
“We compare it with our own organization’s strengths and weaknesses and make the decision of whether an acquisition would benefit the company, improve our relationships with our current clients, provide access to new clients and make us more attractive to prospective customers.”
Only if all these factors align can Tenkku move forward in considering the acquisition.
Recognizing your own company’s need to acquire another company is relatively simple, Tenkku says. Considering another company’s products and assets, could you grow your own company more easily with the acquisition or without it?
With Med-XS’ first major acquisition of Neoforma GAR Inc. in 2001, Tenkku foresaw the potential benefits of buying the company.
“We made an acquisition of a medical equipment auction company that had many health care facility contracts that we found attractive,” Tenkku says. “We were not proficient at auctions at the time and we needed to increase our contracted business more than anything. Our research also showed that auctions were another logical way to increase our pipeline of medical equipment, so we bought the company.”
Following up that purchase with the acquisition of refurbished equipment provider HealthQuip Inc. and equipment refurbisher Johnson Biomedical Services in 2005 and 2006, respectively, Med-XS now offers a much broader range of services, although Tenkku says the process is never without complications.
“You need to realize that making an acquisition is not a smooth process, and it can be confrontational because you are implementing changes to an existing organization,” Tenkku says. “Our company has realized success in gaining direct access to the inner workings of successful companies and either assimilating that company or duplicating its best practices.”
Tenkku says that in his experience, the process of making an acquisition is an organic one and, as such, no two are ever the same.
“It is imperative that a company analyzes the challenges and takes quick action to avoid any conflicts that would result in negative impact on sales and operations,” Tenkku says. “Clearly communicating the established corporate culture is imperative. At the same time, you must convey your mission, vision and goals to the acquired company in order to ensure that everyone understands the corporate direction.”
Tenkku is careful to point out that, above all, the process of incorporating two companies requires a level of patience from all those involved.
“If you look for success with a long-term perspective, then you will be able to realize your goals,” Tenkku says. “However, if you think that an acquisition is a simple, quick fix, then you will be disappointed by the outcome.”
HOW TO REACH: Med-XS Solutions, (800) 670-7874 or www.medxs.com