Scherr acquired two startups Siiquent, a DNA- sequencing start-up, and Teomik, a provider of research equipment.
Isolde Kraft headed Siiquent, whereas Emanuel Geiger headed Teomik. Siiquent sold everything that hospitals need to do gene diagnosis, and Teomik sold everything that big research labs needed for gene studies. Siiquent sold the diagnosis equipment cost-to-cost but had figured out how to sell the consumables for a bit less than the fixed reimbursements the hospitals and labs got from insurers. Hence Siiquent earned most of its revenue by selling these consumables. In an exacting regulatory market, Siiquent had earned its customers’ trust by helping them with every procedure for free.
On the other hand, Teomik operated in a market with few regulations, and its revenue model was based on making money from the sale of the equipment itself. As for the consumables, Teomik was not concerned if their customers got them from them or someone else. Teomik’s revenue model aligned with its non-regulatory research market.
Imposing a single revenue model has pros in terms of providing necessary directions to the company in terms of its future vision, sales efforts, and customer support. Not only would it allow Siiquent and Teomik to join their workforces for efficient work, but also it would enable Scherr to proceed forward in a more focused way and eliminate any internal competition. The con of a rigid single revenue model is that it might create friction between the various department, and Scherr might not be able to respond to the rapidly changing market with so many new competitors coming in.
Letting the company continue on its way would make the company more resilient to new competition and the changing needs of the customers, but at the same time, it can lead to a waste of resources exploring a new revenue model and developing technologies for it.
There are multiple stakeholders in the merger, the major ones being the board, the upper management of Scherr, Teomik, and Siiquent. Firstly I would collect the expectation of each stakeholder from the merger. For, eg:- The board may want to maximize future profits, the CEO might want to maximize immediate profits, and Teomik and Siiquent might want the adoption of their revenue model. I will then compile a list of overall expectations of the merger. Then I would ask both Isolde and Emanuel to discuss and understand each other’s revenue model. And come up with 2-3 revenue models for the merged department and point out (1) How each expectation in the list can be fulfilled with their revenue model and (2) How using their revenue model can fall short of fulfilling each expectation. I will merge this report with the market analysis report from the marketing department and discuss it with Isolde and Emanuel to finally develop two revenue models with their pros and market fit. This report will then be presented to the relevant stakeholders for making the final decision.
