The following was published online by Nature on April 21st.

By Anu Acharya. With careful due diligence, help from financiers and a keen eye, even small companies can grow through mergers and acquisitions.

The word ‘merger’ often is associated with a big company buying a smaller one or two large companies coming together. But it is not only large companies that can succeed through acquisitions—even startups can use mergers as an effective way to grow their businesses. As a small team leading the startup Ocimum Biosolutions, based in Hyderabad, India, a decade ago, my colleagues and I could have opted to grow the company internally. But early on, we decided to take the path of mergers and acquisitions (M&As) to expand our company.

We had difficult choices to make as our business grew, and we learned invaluable lessons. Here, I share some of my experience and show how Ocimum evolved from a small company into a globally integrated genomics firm.

Ocimum’s long evolution

Ocimum Biosolutions currently offers informatics solutions, wet lab genomic services and products for sample storage, processing and visualization of gene expression data, sequence data organization, small interfering RNA (siRNA) design, genome analysis, gene patterns, in silico gene optimization and customized biological databases. But a decade ago when Ocimum was just getting started, biological research had not yet comprehensively embraced ‘omics-based approaches, and our business was based on a different model.

We started by collaborating with pharmaceutical and biotech research organizations, solving their challenges and increasing the productivity of their R&D efforts through the application of our in-house informatics expertise. While doing this, we unearthed several places in the R&D value chain that could be streamlined with informatics, but in our first few years, we grew organically. We maintained a positive cash flow by licensing bioinformatics and enterprise software solutions like laboratory information management systems and by providing bioinformatics training.

Within a few years, we had built a thriving business with a steady pipeline. Money was coming in, and it would have been easy to be content with the direction of the company. However, Ocimum aspired to be more than a bioinformatics company—we wanted to be a ‘lab next door’ that could provide a researcher with services across the spectrum in a timely and cost-effective manner. To do this, we knew we would have to break out of our comfort zone and expand beyond the perceived limitations of our small team and startup company. We looked at our goals—a strong presence in the US, expansion of our portfolio of services to include biomarker discovery, and a customer base in Europe—and realized growth through acquiring assets seemed like a great way to build a large, scalable and sustainable company, so long as the pieces fit with our proprietary Research-as-a-Service (RaaS) business model. Ultimately, we achieved these goals through a combination of organic growth and three mergers (See table). (more…)