Roshawn Blunt wasn’t looking for an escape hatch.

1798 Consultants, the company she founded in 2010, was turning a nice profit. As pharma clients struggled to extinguish market access and reimbursement brushfires, 1798 earned a reputation as one of the sector’s elite tacticians. The firm had grown to nearly 50 full-timers and was looking to hire 10 or 20 more.

And still Blunt couldn’t shake the nagging feeling that she had taken the company as far as it could go.

“Our organization was focused on strategic consulting, but clients were seeking to have additional agency capabilities,” she recalls. 

Across the country, Fingerpaint founder Ed Mitzen was facing a related dilemma: His firm was so beset by client requests for market access expertise that it had taken to outsourcing some of the work. After crunching some numbers, the leadership team came to the conclusion that it would be wiser — and obviously faster — to acquire market access capabilities than to attempt to build them from scratch.

Mitzen quietly started asking clients and industry colleagues for their opinions around the agencies doing the smartest and most forward-minded work in the access realm. The name that came up time and again: 1798. After a consultant hired by Fingerpaint to evaluate 1798’s work affirmed what the company had heard, Mitzen picked up the phone.

“Roshawn was kind enough to take my call, then we met out at her place and talked about my vision of what we’re trying to build here at Fingerpaint,” Mitzen says.

Just less than a year after that first outreach, in early February 2020, the deal was sealed and 1798 formally became Fingerpaint’s La Jolla, California, office. 1798 retained its name (with “a Fingerpaint company” appended to it) and the entirety of its leadership and staff moved under the Fingerpaint umbrella.

Most medical marketing agency M&A activity proceeds in a far less linear manner than the Fingerpaint/1798 deal did. As often as not, the process is rife with cultural mismatches, infrastructural roadblocks and ego conflagrations (though best of luck to anyone attempting to get recent acquirers or acquirees to go on the record about such unpleasantness).

But as the pace of deal-making continues to accelerate, would-be buyers and sellers find themselves at a crossroads. Business is good, with medical marketers having proven their mettle during the most challenging stretch of just about every healthcare professional’s life. 

There’s a powerful stay-the-course argument to be made.

At the same time, given the flow of private equity funding to the sector, it’s safe to say that there are fewer firms potentially up for grabs right now than there are larger agencies or networks waiting to throw money at them. Some opportunistic owners could view this as a now-or-never scenario.

June 2021 alone saw the purchases of MM+M Agency 100 honorees Splice (by Fingerpaint), Closerlook (by Fishawack Health) and DiD Agency (by Lucid Group). Other deals that have gone down since the start of 2020 include Fingerpaint’s acquisition of Leaderboard, Fishawack’s of StoneArch and Hive Health, and Real Chemistry’s of 21Grams, Symplur, Discern Health, Elysia Group, Starpower, Swoop and In every instance, the acquiring organization all but announced its intention to remain in a cat-like state of readiness in the event that it needs to pounce on a coveted asset.

“There’s no slowdown in the number of transactions coming to market and no slowdown in terms of investor appetite,” says Lucid Group corporate development director Rob Apollo. “People are fully bought into the macro themes that support growth in this space. The sector has gone from strength to strength and people are investing behind that.”

The interest in healthcare agencies is so keen, in fact, that even a well-funded and highly motivated buyer such as Real Chemistry is wrestling with some small amount of frustration. “Honestly, the biggest issue is finding high-quality opportunities. That’s the rate-limiter here,” says founder and CEO Jim Weiss.

Is the agency-acquisition trend a bubble waiting to burst? Blunt doesn’t think so. “The other day, a friend and I were wondering if these acquisitions were going to be a little like what we’re seeing in the housing market, where there’s a perception of a shortage and prices are maybe higher than where they should be,” she says. “But in healthcare, there’s always going to be the need to drive support to patients and providers — and there’s no shortage of ways that can be done. So, if an agency can think broadly about the needs of the marketplace, opportunities will continue to pop up.”

Let’s say you’re a prime target — a data/analytics firm or UX specialist shop with annual North American revenue somewhere in the range of $10 to $30 million. What can you do to get the attention of the Real Chemistrys of the world? And what can you do to see the deal through to fruition?

Remove emotion from the equation

Bringing even a 10-strong agency to life requires herculean commitment; financial exposure, missed family gatherings and the expenditure of gallons of sweat equity are mere table stakes for company founders. It’s less a job than an all-consuming mission.

Suitors might emphasize, especially if they happen to be from-the-ground-up builders such as Weiss or Mitzen, but the last thing any potential partner wants during the due-diligence part of the exercise is drama. “The advice given to me was, ‘It may work out or it may not work out, but always respect the person you’re talking with,’” Blunt says.

Weiss takes pains to distinguish between emotion and commitment. “For a firm such as ours, the question is, ‘Are they really healthcare nerds? Do they love what they do and want to change the way healthcare is delivered, communicated, promoted, activated and marketed?’”

Ditch your parachute 

Just as “doing it for the right reasons” is the default motivational stance for contestants on The Bachelor, so, too, it is for the leaders of companies amenable to being acquired. Mitzen knows this from personal experience: He cofounded Palio in 1999, sold it to inVentiv Health in 2006 and left the company in 2008. 

There’s a misconception in the marketplace that when somebody sells a business, they want to cash out,” Mitzen says. “What they’re really looking to do is expand services and what they’re able to do, not drop the mic and go sit on the beach somewhere.”

Weiss puts it more bluntly. “Don’t do this to exit. Nobody wants to buy a company from somebody who just wants to get out.”

Allow familiarity to breed more familiarity

Owing in part to COVID-19 and in part to the complicated nature of the transaction — Lucid Group is based in London, while DiD Agency has offices in Philadelphia and Ambler, Pennsylvania — the Lucid/DiD deal took 18 months to complete. However, Apollo believes that the protracted process benefited both parties.

“It gave us confidence that [the acquisition] was going to be successful,” he says. “We could actually build case studies. We could go to clients with the proposition and show that there was an appetite for the offering …. We had great conviction that the hypothesis we were investing behind made sense.”

Translated: If you’re asked to partner on a project (or, better still, projects) with an organization whose capabilities complement your own, jump at the opportunity. Most acquisitions, in healthcare and everywhere else, are grounded in comfort.

Flash your multitasking bona fides

Being acquired, Blunt jokes, is almost a full-time job in itself. There are disclosures, t’s to cross, i’s to dot, conversation after conversation after conversation. However, the clients whose support got you to this place aren’t likely to take kindly to a drop-off in their work product amid the pre-sale maneuvering.

“M&A is a massive distraction. You have to build pretty substantial infrastructure within your business to be able to manage it while still doing the work,” Apollo says. To that point, Fingerpaint employs “people whose only job is to focus on integration” and the infrastructural concerns that come with it, Mitzen reports.

Learn to love private equity

Frankly, you don’t have much choice. PE firms such as New Mountain Capital and Knox Lane have helped Real Chemistry and Fingerpaint, respectively, realize their acquisition ambitions. However you might feel about the prospect of getting in bed with these organizations, keep in mind that they do more than dangle dollars.

“They don’t just show up with money and investment guidance. They stick around and help you do the hard work to make it real, on both sides,” Weiss stresses. “I’m not saying New Mountain might not have some of the same motivations as other PE firms, but they put their money where their mouth is when it comes to creating great companies.”

Plan on sticking around for a while

This is a tricky one, in that some execs learn that they prefer being in charge only after they’ve ceded control to the acquiring company. The what-a-perfect-fit euphoria of deal-announcement day has been known to fade quickly amid the grind that is quotidian agency life. Similarly, sometimes the newly established executive pecking order works better in theory than in practice.

Happily, the smartest purchasers tend to find their way around such alliance-smashing obstacles. Mitzen wanted Blunt’s smarts, leadership ability and wealth of industry connections as much as he did 1798’s market access know-how. 

“I needed to make sure Roshawn wanted to stay on and drive the business, because the last thing you want is to bring a company in and then have the heart and soul of it say, ‘This isn’t for me,’” Mitzen says. “Then you have to run a business you don’t know how to run. It’s easy to rip the guts out of a business if you’re not careful.”