“We see great opportunity in bringing strong leadership to Ricerca, which has previously been institutionally owned,” Croley told Outsourcing-Pharma.com. “Our deal was not a part of any bank or lender deal. We had the highest offer for the business. We saw value perhaps where others did not.”
But just how Croley and Main Market Partners, which acquired Ricerca on Tuesday, plan to turn around the CRO remains to be seen.
One industry insider – Neal McCarthy, managing director at Fairmont Partners -- told us he was aware of several potential buyers who had discussions with then CEO Tim Derrington and none could come to terms on a deal with Ricerca.
“From all outward appearances, the company is burning money, no one else was interested in paying any real value, and the only real alternative was to allow Croley to take over the ownership and attempt to preserve some amount of value,” McCarthy said.
But Croley seems confident he has the right experience to turn Ricerca around, telling us, “We have significant experience in enhancing process and project oriented businesses and are excited about the opportunity to deliver great value for our investors with Ricerca Biosciences."
One major question is how the company’s clients will respond to the WARN notice that Ricerca filed back in September, which essentially said that all of the company’s employees would be laid off without a new owner.
“I have been in touch with many customers, and the WARN notice does not seem to be an issue,” Croley said. “The WARN notice has been retracted. Customers are very supportive due to the strong science and good service at Ricerca. We look forward to building this company.”
McCarthy put it more bluntly in terms of the likelihood of a successful turnaround, saying the company has two alternatives:
- Increase revenue – “that means you need to convince more customers to give you more business – that is really hard when your clients know you filed a WARN Act – I am sure there is an example of a pharma services company that survived a bankruptcy or insolvency scare, but more customers want to entrust their million dollar drugs to a business that will not disappear in the next few months”; or
- Cut costs – “if they can’t get revenues, they will need to cut employees,” McCarthy said.
But Croley denied that there will be any layoffs now that he’s taken the helm at Ricerca, adding: “There may be some adjustments due to upgrading of positions.”