Keeping the jobs in Madison after a tech acquisition not a sure thing
Madison tech companies that get acquired don’t need to close up shop if they can convince their buyers there’s more benefits from the acquisition than the technology itself, leaders of life sciences companies said at a WARF panel.
That means local tech companies need to show there’s a strong team in place that their buyers “should not disturb,” said Scott Johnson, a Luminex vice president. Johnson was among the roughly 15 employees in Madison’s EraGen Biosciences before Luminex acquired it in 2011; today, Luminex has about 90 employees in Madison..
“It’s just been a fantastic success story for Madison,” Johnson said during last week’s discussion. “Frankly, it really is because of the people.”
Another example: Illumina’s acquisition of Epicentre Biotechnologies in 2011. The most likely result, said Epicentre’s Nick Caruccio, was that Illumina “should’ve shuttered” the Madison operations and moved them to San Diego.
But Epicentre had already been profitable for more than 20 years, Caruccio said, and Epicentre’s staff was focused on a more specific area that set it apart from other Illumina sites. Epicentre had roughly 50 employees during the acquisition, a number that will likely grow to 130 by the end of 2016.
“We’re growing, we’re investing, we’re expanding,” he said.
The panel at the Wisconsin Institutes for Discovery last week featured out-of-state companies that recently acquired local tech companies, evaluating strengths and challenges that Madison faces as those acquisitions occur. Among the key challenges, the panelists agreed, is the difficulty out-of-state companies have in traveling to Madison and ensuring there’s a stable supply of talent available in the city.
It’s not just having an adequate supply of talent, Luminex’s Johnson said, but that talent needs to be able to “cross-pollinate” and get experience at different companies in the area.
“All of us have successful companies that are still here in Madison because we had great teams, but at some level, that happened by chance,” he said.
Attracting new companies to Wisconsin, he said, will help ones already here because of the cross-pollination that will occur. Yet the panelists agreed tax incentives and structures play a very small factor in those decisions.
What could play a larger role is if Madison successfully brands itself as a health tech hub, which could convince larger companies outside Wisconsin that Madison is the correct place to grow, said Kaz Hirao, the CEO of Cellular Dynamics International, which was co-founded by UW-Madison stem cell pioneer James Thomson and was acquired last year by Fujifilm.
Hirao, who was previously based in Japan, said he was impressed with the amount of technology and talent available at UW-Madison, a “very great asset” that the city should continue to promote.
Andrew Kirkpatrick, senior vice president at Accuray, echoed those thoughts. In 2011, Accuray acquired TomoTherapy, a company co-founded by UW-Madison professor Thomas “Rock” Mackie. Since the acquisition, Accuray now has 275 employees in Madison and has moved all its manufacturing here.
Kirkpatrick, who married a UW-Madison grad, said he “knew what Madison was all about,” but many at Accuray didn’t when they added operations here.
“One of the challenges we had was when we asked who wants to go run Madison, it was crickets,” Kirkpatrick said. “I think it’s the perception of the state. … I think there’s a big perception opportunity; I wouldn’t say it’s a problem. This is an ecosystem that’s a great place for companies to be, and then people in leadership positions will be like, ‘I want to move there.’”
-- By Polo Rocha,