Carve-outs are notoriously tricky, and undertaking one during a pandemic adds further complexity. However, one year on, Rosemont has grown profits and revenues by a third and is planning an ambitious international expansion.

Many private equity deals take months or years to negotiate, and typically involve competitive processes with multiple suitors vying for an asset. Other times – rarely – the chemistry and timing are just right to affect a deal without external parties. Such was the case at Rosemont Pharmaceuticals last year.

The firm was sitting within its listed parent company Perrigo, a large business with a focus on consumer healthcare products. Rosemont’s position was growing increasingly uncomfortable: despite being a small division, despite its strong niche and attractive financial profile, it was not a priority for investment given Perrigo’s strategic priorities. As a result, CEO Howard Taylor describes Inflexion Partner Ben Long’s approach and subsequent deal as “probably the best thing that could have happened to us”.

“The firm wasn’t up for sale, but the parent’s CEO wanted to focus on consumer health, rather than prescription drugs. This gave Ben the impetus to approach Rosemont after tracking the business for some time.” In the absence of a formal process, Howard spoke with a number of CEOs that had worked with Inflexion, enabling him to build up knowledge tacitly. A carve-out was agreed and announced in June 2020.

Thereafter followed a process which Howard describes as “very engaging, liberating and productive – but also very stressful.” The productive element is clear: sales and profits grew by over a third (35%), 33 new products were in-licensed and the team was greatly enhanced. Though Howard admits

It was very successful, but the process of a carve-out and then the accelerated growth we set out to achieve were extremely challenging.

Exercising independence

Rosemont was already relatively independent, with its own manufacturing and research and development. But the business was dependent on Perrigo for finance and IT, and these parts of the jigsaw needed transitioning to the newly independent Rosemont. “I knew I had to get a finance director; what I didn’t realise was how much I’d need one.”

“The first priority was to get the right people,” Howard explains. Here Inflexion supported Rosemont to recruit an experienced Chief Commercial Officer, a Chief Finance Officer and a Chief Scientific Officer. “We had to sort payroll and SAP, create a finance department, change our mission, reset our values, and realign hierarchies. The final part of the jigsaw is switching over ERP systems. It’s been a long, hard slog,” Howard recalls.

It’s a lot of change in a short period of time for anyone, but the familial culture which Howard is proud of meant it was particularly challenging for some long-serving members of staff – some of whom have been with the company for over three decades. To help engage everyone, he got them all involved in meetings to discuss concerns, thereby enabling employees to feel they were part of the process. Ultimately, they now have the best of the established Rosemont culture updated to make it fit for future growth. Throughout this transition, with the backdrop of a global pandemic, the team also remained focused on maintaining the highest level of customer service, capitalising on competitor shortages.

“It’s all happened so fast,” Howard recalls, talking about how they have been focused on independence whilst looking ahead at growth. While there is a firm eye on international growth, the business has also been busy looking for acquisitions in the UK and beyond. “We have kissed a lot of frogs and gone right to the line on a few and hope to announce something soon. I underestimated how much work goes into diligence; our managerial strength isn’t easily transferable to M&A. It’s been a real shift of capabilities and culture.”

Rosemont have been identifying the opportunities and then drawing on Inflexion’s expertise in executing on deals.

They are incredibly creative in making a deal worthwhile for both parties by understanding different mechanisms that can be pulled. We’d not be able to pursue M&A if it weren’t for our newly appointed CFO, CCO and Inflexion’s expertise.

The firm is eagerly looking to the US as a big and interesting market, with Rosemont applying a three-pronged approach to expansion there:

1. internal capability which involves a new set of labs in Leeds with 23 scientists creating products for the US specifically
2. creating a target list of companies and products for potential M&A
3. working with an in-licensing partner in the UK who can also do work in the US.

“Inflexion have enabled us to invest in these ideas as they provide the cash, whereas before we were generating cash for the rest of Perrigo, so couldn’t reinvest for our own growth. We’re overdelivering this year and Inflexion are allowing us to reinvest it so we can successfully expand in the US.”

It’s clear Howard is as proud as he is excited for Rosemont. “There is a fierce degree of pride on in who we are and what we do and that’s given us excellent tenure.”