Harlan Laboratories, Inc.
Fund: Genstar IV
Opportunity
Genstar Capital’s investment in Harlan Laboratories, Inc. (“Harlan”), a leading global provider of preclinical products and services, resulted from our long-time life science sector focus.
The Genstar deal team has closely followed the Harlan story over the course of several years and developed a strong and open dialogue and business relationship with the owner and CEO, Hal Harlan. As a result of a lengthy diligence, negotiation and transaction process Genstar had the opportunity to closely evaluate and observe the performance of the Company for over a year. In particular, Genstar was able to analyze the significant operational and strategic opportunities presented by Harlan. More importantly Genstar was able to validate, through the initiation of a formal CEO search process, the ability of Harlan/Genstar to attract a world class leader to run the company prior to acquiring the company.
Genstar acquired Harlan in December 2005.
Strategy
Genstar’s strategy for Harlan is addressing three key issues:
Leadership: Harlan lacked strong, decisive leadership prior to Genstar’s investment, preventing the company from achieving its full growth and earnings potential.
Operational Inefficiency: Harlan operated in a highly inefficient manner with a number of redundant facilities and unintegrated operations.
Growth: Harlan had underperformed its industry peers in organic growth and had made a series of unstrategic acquisitions which burdened the company prior to Genstar’s ownership.
By addressing these key issues, Genstar believes the company’s performance and competitive position can be significantly enhanced.
Result
In February 2006, Genstar addressed the principal strategic issue by recruiting Steve Sullivan, the former head of Covance’s global clinical diagnostics division, to serve as CEO of Harlan. In addition, we invited Steve and his management team to invest in the acquisition and implemented aggressive stock option and bonus programs. In less than a year, Steve has already led the company through significant organizational and operational changes, resulting in significantly improved operating results.