Branding in Venture Capital-2

Arsenal is a leading private equity firm that specializes in investments in middle-market specialty industrials and healthcare companies. Since its inception in 2000, Arsenal has raised institutional equity investment funds of $5.3 billion, completed more than 200 platform and add-on investments and achieved more than 30 realizations. The firm works with management teams to build strategically important companies with leading market positions, high growth, and high value-add.

BB: You work in an industry that often seems to have a less developed understanding of branding. Why is branding so important to you?

DS: I have been actively involved in five branding campaigns during my nearly 40-year career in the Life Sciences industry. I believe brand is the face, personality and values championed by your business. It helps your company create loyal clients, but it also helps you align and develop loyal employees. A quality brand gives people something to believe in and something to stand behind. They feel like they’re part of something significant.

BB: Can you describe one or more projects where branding played a pivotal role for you or for a business in which you invested?

DS: I served as Chairman of a company that completed four mergers/acquisitions, each business with its own brand identity, logos, culture, etc. Across the top of their business cards and marketing materials, all four company logos were proudly displayed. I later met with the head of R&D of a large pharmaceutical company in Switzerland, who said engaging with our company was like walking up to a house with four front doors. Soon after, we launched a major rebranding initiative to create a clear, unified brand promise. One that resonated with our clients and gave our employees clear purpose and conviction. The company became a market leader in its space and delivered exceptional returns to investors upon exit.

BB: What role does an investment firm such as yours play in raising awareness of branding among the companies in which you invest?

DS: Arsenal Capital’s investment professionals and operating partners work seamlessly on each platform investment. The operating partners serve as Executive Chairmen of the companies once these are acquired. These are knowledgeable leaders who have served as president and/or CEO multiple times, with years of experience building valuable companies. They work with the CEOs and their leadership teams on developing people, building and executing strategy, improving processes and systems, delivering performance, driving M&A and creating value. Branding touches every component and is central to our strategic planning for every company we acquire. We take steps to make sure that everything the organization exemplifies is easily recognizable through the brand.

BB: How do you measure the value of the intangible asset that is the brand?

DS: We conduct extensive diligence and market research before determining value and investing in a company. Among a long list of parameters, we examine the company’s growth, market share, competitive positioning, client perceptions, client retention, proprietary technologies and employee satisfaction. The goodwill portion of valuation, defined as the purchase price less the difference between the fair market value of the assets and liabilities, is a good measure of the company’s brand value and related intangibles.

BB: If you had one piece of advice for an investor who thinks that branding is just about advertising, what would it be?

DS: Branding impacts value. It touches and influences every aspect of a business. We invested in two highly complementary businesses, Caprion Biosciences and HistoGeneX, in August 2019. Different brand identities, company cultures and client experiences. Integrating the businesses was a challenge, and became more challenging with the addition of two follow-on acquisitions in 2020. Working with the team from BrandBourg, we launched a new brand in January for the combined companies. The new brand, CellCarta, provided a unifying identity, a promise to our clients, and a purpose for our employees. It also enabled faster integration and improved positioning, which has accelerated growth and increased value. Today, the organization is singularly focused on its mission to become a leading provider of precision medicine services to biopharmaceutical companies around the world.

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