Corporate development as a growth driver: Balancing M&A, collaborations, and investor relations

M&A is a core part of corporate development, but at most firms it’s only a small piece of a much broader strategic focus.

To find out more about what it’s like working in corporate development in a fast-growing business, we spoke to Gary Giblen, Director of Corporate Development at Aerolase. The US company designs, manufactures, and sells innovative laser devices to treat medical and aesthetic skin conditions.

Gary discusses what his role involves, the importance of strategic partnerships, and how to find the right PE investors.

Q. Can you tell me a bit about your role and key responsibilities?

Well, corporate development is quite a catch-all title as it covers so many functions. For instance, a key part of my role at Aerolase is providing analysis of competitors and industry trends.

For instance, our industry [aesthetic dermatology] had been experiencing sustained double-digit growth for years, and suddenly, in 2024, that went out the window. The company needed to understand what circumstances had caused that sudden drop and how we should respond. 

We always outperformed the rest of our sector, but we still needed to know why the whole industry was depressed in 2024.

Q. Does your role cover investments or M&A?

Yes, it includes all things investor related, such as identifying quality institutional investors or PE in our case. I’ve done some fundraising and I’m involved in M&A, but we’re a small company so we don’t depend on acquisitions for growth. For us, it’s been more about strategic collaborations. 

We have looked at acquisitions, but we also see a lot of interest from parties looking to buy us. So we need to know how our valuation stacks up: as a private company, you need to know how you compare and what valuation multiples are appropriate.

Q. Can you tell me more about your work dealing with investors and PE firms?

We’ve grown through being selective about when we bring in growth capital, equity, or venture debt. It takes a considerable amount of time and responsibility to identify and handle inbound conversations with private equity firms. 

We have a VDR (Virtual Data Room), hence the use of Ideals, which enables us to share information securely, but you also have to explain things and have face-to-face conversations with them.

Q. When you’re looking for investment or talking to private equity firms, do you have criteria for who you want to take investment from? 

Yes, that’s exactly right. We are targeted and selective about whom we want to work with. Because there are firms that just want to buy a company cheap and then flip it in three years, and that’s okay for certain situations. But if you’re strategically well-situated and doing well, as we are, you want a longer-term partner for growth, not a buyer that will grow you a little bit or slash costs before pushing for the company to sell out quickly. 

At Aerolase, our mission is to become a global leader in aesthetic dermatology, and we’re well on our way to achieving that goal. The last thing we want is a short-term investor coming in, trying to chisel out costs, then quickly selling us to another short-term investor. Which has happened a lot in our industry.

Would we want anyone specific? Well, it’s great if they have some expertise and contacts in the industry, but it’s not essential. They just have to be business builders as opposed to, let’s call them, flippers and cost cutters. 

Our CEO was also our founder, and he’s still active in the business, so our partners need to be people who are good at dealing with founder-led businesses. Not all of them are; some just want to come in and nuke out and replace the entire management team. 

And we’re growing 25% or more every year just through internal resources, so we don’t need new money to succeed and grow. But we would like to find a partner who can add high level expertise and growth capital.

Q. Can you give me an example of a Corp Dev deal that hasn’t gone to plan?

A good example was a deal I did with a midsize public company making devices for the  atherectomy market. It was an R&D and marketing collaboration for an important new treatment to clear blood clots, but the current techniques are mechanical and invasive, a bit like drilling for oil! Lasers would do a better job, but none had been developed to perform this procedure. 

We crafted a CDA (a collaborative development agreement) to develop a laser for atherectomies. The other company invested two tranches totalling $5.2 million, which allowed us to allocate the necessary resources. We worked on it for a few years and everything was going great until they, being a medium-sized public company, shifted its corporate priorities.

Basically, it was under shareholder pressure to improve the share price, so the longer-term collaborations were halted, and the company focused on an incremental amping up of the existing businesses. It then became apparent that there had been a lot of acquisition inquiries, and the company was subsequently bought out by Abbott not long after our project ended. 

And when companies are looking to acquire, they usually want a defined box, they don’t want a lot of open-ended projects. Abott was acquiring them because of its very strong share of the atherectomy market and didn’t want to complicate matters.

That’s an example of a project that added a lot of corporate value to both parties while it was ongoing. But then, for very valid corporate reasons, the project didn’t finish. And that happens.

Q. In terms of growth, are you looking at M&A or more CDAs or organic growth? What is your main focus from a corporate development perspective?

Organic growth is the lifeblood of the company because that’s what makes us valuable to potential employees or PE investors. So partnerships like the one we did with the mid-cap public company are a big focus. 

We did a strategic collaboration deal with a private French company called Clarteis, and they make innovative small lasers for certain treatment areas that we don’t cover. Their products are complementary to ours, but they didn’t want to be acquired, so we’re now their US affiliate, and we work very closely together. They’re selling to Western Europe and parts of APAC, and we’re selling to the US and Canada and potentially other parts of the world with them.

Q. When you’re doing CDAs or M&A to grow the company or give you new product lines, what are the biggest challenges you face?

Well, firstly, we don’t have vast corporate coffers. Companies like Boston Scientific or J&J have tons of money to throw at things. We don’t, so that’s a challenge.

Then, the product has to be innovative. We wouldn’t ally ourselves with a company that was just another player in the same space. Because Aerolase is recognized as an innovation leader in aesthetic dermatology, and that’s how we’ve succeeded.

Q. Is there anything exterior that’s affecting your role or having an impact on corporate development at the moment? Any kind of regulation changes or policy changes or interest rates coming down?

Regulatory approvals are generally not a challenge in the aesthetic device industry, and antitrust is a non-factor because we’re in a quite fragmented space. 

Lower interest rates would be nice, but in reality, while they do affect the practitioners who buy our lasers (because if they’re financing, they have higher payments), our added value to the practice is so vast and fast that it usually just dwarfs the impact.

Q. When you’re looking to do those kinds of Corp Dev deals, such as taking on investment, what makes your company more attractive to investors?

Well, besides being the innovation leader in a quite me-too-ish industry of aesthetic and derm devices, Aerolase has developed a considerable amount of brand equity. I mean, five years ago, we were unknown, or at least only recognized by a cadre of innovative dermatologists. Now, not only are we more widely recognized as a significant innovator, but even consumers know who we are. We’ve developed good social media aimed directly at consumers and influencers.

So that certainly makes it easier to do consumer-type collaborations like one we’re exploring with some major brands, such as ROC and Establishment Labs. We just did a joint presentation at this year’s IMCAS in Paris, which is one of the biggest aesthetics shows. 

Brand recognition goes a long way to getting interest from corporate development partners. If we’re better known, then you get patients asking for you, which is important for investors. They love the “moat” of brand equity as well as true innovation.