Biomet's Contrarian Conservatism
Beset by cost and consolidation pressures, many orthopedic companies are re-thinking traditional industry success strategies. Not Biomet. The Warsaw-based company is quietly thriving by focusing on core industry values such as the importance of independent distributors, the ability of companies to differentiate their technology, and the fundamentally local nature of the industry.
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Five years ago, Biomet was in turmoil, as the board announced the company was for sale and the company's long-time CEO stepped down. The eventual buyers: a group of leading private equity firms. Biomet still faced a number of internal challenges, including fixing a spine and trauma business that was performing poorly. Critical to Biomet's turnaround was re-establishing the culture of stability that had long characterized the company. At the same time, it now has a new, more aggressive focus on capturing market share commensurate with its role as a top orthopedics company.
Once the very model of stability among orthopedics companies, Biomet went through a rocky period a while ago as its stock price tanked and its long time CEO left the company. To the rescue has come a group of private equity investors who will take the company private when the transaction closes later this year. Biomet officials insist the company's turnaround will be based on the same success factors that made the company successful in the past: product innovation, strong distributor relationships, and close customer ties. But the question is: what changes, if any, will Biomet's new owners bring?
A $10.9 billion bid by a consortium of private equity investors to buy Biomet raises questions about whether this is the first of many such deals or an outlier.