From left to right, Renaud Cuenot, Director of Project Management, Brian McKeon CEO of Dawnlough, Sébastien Virtel CEO of Acrotec Medtech, Norbert Giraud CEO of Microweld, Jean-Pascal Wisard CEO of Tectri and Donal Galligan CEO of Takumi.
Interview with Sébastien Virtel, Acrotec Medtech for the Swiss magazine MSM.
Sébastien Virtel, CEO of Groupe Acrotec’s Medtech division, looks back on his career and the genesis of the entity he now heads. A great success story whose history is just beginning.
Could you tell us a bit about your background and your role within the Acrotec Group?
I studied mechanical engineering in France, then during my studies I had the opportunity to do internships in the United States, and a double degree in international business in Mexico.
My career path led me to begin in Haute-Savoie, France, in precision machining for the automotive industry. After ten years in this industry, I wanted to discover new horizons. My path crossed that of François Billig, founder and CEO of Acrotec Group in 2015. At that time, Acrotec Group was very much focused on the watchmaking industry, which accounted for 80% of its business, and 20% for the industrial division. Acrotec had just made its first acquisition in France of DJC, and I was tasked with boosting this company’s business while also taking up a position within the Group in 2016 as Vice President of Sales on the non-watchmaking side. The same year, a new German investment fund, Castik, arrived, enabling the Group to grow and increase our capacity to acquire new companies. Very quickly, the decision was taken to diversify the Group into Medtech.
We therefore began sourcing potentially interesting companies, bearing in mind that at the time, Medtech activity within the Group was very marginal, representing only 1 to 2% of our business. To enter this market, we had no choice but to make acquisitions of totally dedicated companies. We therefore began the first acquisitions in agreement with the investment fund. I was in charge of coordination for a few years until the end of 2022, when we founded the divisions in order to have more focus on our activities. Between 2016 and 2022, we had made around twenty acquisitions, which was starting to add up! On January 1, 2023, I was appointed CEO of the Acrotec Medtech division. This appointment was a natural and smooth process, as I was in contact with all the companies in the division from the outset.
What are the ambitions of the Acrotec Group, and more specifically of the Medtech division you manage?
The Acrotec Group’s current priority is to focus on Medtech, and in particular on acquisitions. The watchmaking division is mainly present in French-speaking Switzerland, while the Medtech division is more internationally oriented.
This worldwide expansion began 3 years ago with the first acquisitions in Singapore, followed by Ireland, the USA and Germany. This dynamic of international expansion is destined to continue, as we’re in a global market and we need to be as close as possible to our customers. 3 years ago, when we acquired Singapore-based Team-Metal, the location of their production in Indonesia and China was of great interest to us. This allows us to be as close as possible to our customers, while at the same time having the management of the company in Singapore, where the management style is closer to that of the West. Given the current economic climate, many of our competitors are leaving China; we are targeting the Chinese market, so our positioning is different.
The U.S. market remains our preferred market, which is why we need to expand there. Today, it’s by far our biggest market. We have only one production unit in this territory, Axial Medical, which is a fine model of success. Having Vin Visco with us, as well as Vince, his father, who sold us the company before making the transfer, gives us an American witness who usually accompanies me when I go to meet American companies. He tells his story, and his journey with the Acrotec group, which puts us in contact with many companies, some of which may soon join the Medtech division.
Today, the Acrotec Group has 30 companies, ten of which are linked to the Medtech division.
What share does this division represent within the Group?
At present, 53% of the Group’s industries are watchmaking/jewellery, 27% Medtech and 20% Precision High-Tech. Our vision for 2028 is to significantly increase the share of Medtech.
The Medtech division is particularly strategic for us. Today, we have all the cards in hand to build this division sensibly. We now need to find companies with sufficiently differentiated markets and manufacturing processes to avoid internal competition.
We are also very careful to ensure that the company’s activities are in line with those of the others in the Group. The new company must provide added value, whether in terms of process, market or customer. Within the Acrotec Group, we are also very careful to ensure that this adjustment is made with the CEO of the acquired company, since we are highly decentralized. Our companies therefore need to complement each other, and we’re looking for the missing piece of the puzzle, so that our companies can work together.
What synergies exist between Medtech Division companies?
When a company joins the Group, there is an integration period during which the newly-acquired company has to learn the business of the other companies in the division, while at the same time understanding what the Group can do for it. Little by little, we get the CEOs to open up to their teams. As soon as there’s a new acquisition, we go on site with the managers of the other companies in the division to understand how the company operates and how they can better represent the Group to their own customers.
We organize this visit within 2 to 3 months of the acquisition, to allow time to install certain systems such as financial integration and reporting. We try to integrate these new companies into our communication channels and marketing elements as quickly as possible. The aim is to ensure that every sales person, when they visit their customers, can talk about the latest acquisitions and what they offer in terms of added value for the Group.
One example is Friedrich Daniels, a specialist in the manufacture of surgical instruments. This is a product sector that we hadn’t previously been involved in within the Group. In just a few meetings with customers, we’ve had a number of opportunities. The fact that we are part of the Acrotec Group is reassuring and a sign of confidence.
The most important synergy we have within the Group is clearly the sales synergy. We have a common reporting system with Salesforce. This gives our companies an overview of who our biggest customers are, and of our consolidated figures. They can also see that a particular company is already working with a particular customer, which enables introductions between companies. Our system allows one of our companies, for example, to request an introduction to a particular customer, which enables us to determine which company is best suited to do so. Discussing different markets with each other is therefore essential. Today, with 10 companies in the Medtech division, it’s much more rewarding, and our meetings are very productive.
On the organizational side, we hold a monthly COMEX where we bring together all the Medtech CEOs, as well as our Director of Business Development and our Director of Transversal Projects. This meeting is an opportunity to review the previous month’s figures, to monitor trends in each company, their vision in terms of customers and, above all, to discuss cross-functional projects. These are projects on which we have at least two companies collaborating, sometimes as many as 6 or 7. These cases are happening more and more regularly, which is why we have launched a central project management structure, currently made up of two people who manage coordination between all these companies. This organization is really unique to the Medtech Division.
With this model, coordination between the companies is stronger. At a strategic level, we make sure that this is in line with both the company’s own strategy and that of the Group as a whole.
We also organize a monthly business development session with all the Group’s sales people. The aim is to discuss the different markets they’ve won, the problems they’re encountering, the leads they have with certain customers, and the organization of trade shows. Before joining the Group, most of our companies didn’t take part in trade fairs; today, they’re all visible and represented on our Acrotec Medtech stand. Our companies are well known in the industry as brands in their own right, so our aim is to associate them with Acrotec Medtech. The brand is becoming well known in the United States thanks to the acquisition of Axial. We therefore favor “balanced” marketing between our companies on the one hand and the group on the other.
In terms of technical synergies, we are launching quality, production and technical working groups between all the companies, so that they can discuss issues that some of them are facing and which have probably already been discussed within the group. Production managers, for example, take part. These sessions are held quarterly and online. Before we set up this type of working group on technical issues, we wasted a lot more time centralizing the discussion, since the issues went up to each CEO, then to the group, and we had to coordinate by contacting other CEOs who had been confronted with these problems… so it was a big waste of time and efficiency.
Finally, on our Salesforce CRM we offer a discussion forum where each company can post its issues and others can respond. For example, a company may be looking to buy bars in a certain material, or another may wish to optimize costs by proposing joint purchasing of certain materials with other companies in the group.
These various synergies, whether at management, commercial or technical level, once again demonstrate Acrotec Medtech’s determination to maintain this family spirit at all levels, in order to maintain this group dynamic. We communicate the success of these synergies to our companies, and even more so when a new one joins the group, to reassure them and encourage them to play the game. But, once again, each company is free to operate as it sees fit, and we make collaborative tools available to them.
The only obstacles we encounter are linked to the different time zones of our companies. This too is an additional incentive to develop our markets in the USA or Asia, so that several companies in the same time zone can trade with each other without constraints.
Are there any specific markets in which you’d like to strengthen your presence, either in terms of products or geographical regions?
In terms of geographic development, we clearly have the United States in our sights. The aim is to have other companies in this zone that are closer to our customers. In Asia, the market is a little tighter, so our development in this territory will depend on the opportunities we find there.
In Europe, we’re always open to opportunities. We are in discussion with companies in Germany and Ireland.
In terms of markets, we are well-established in the orthopedic field, and our aim now is to develop robotic surgery (our latest acquisitions in Ireland are a step in this direction) and cardiovascular surgery, a market we were able to develop by setting up in Ireland, where all our major customers are present. This new market will enable us to move into extremely complex micro-components, for which we’ll need certain technical synergies from the watchmaking world.
Have other Acrotec Group companies been able to benefit from the expertise of certain Medtech Division companies to help them move into these new markets? Do you provide specific support in this respect?
We are happy to support Acrotec Group companies, giving preference to those already certified in medtech and already working with these customers. Nevertheless, when the opportunity arises, we call on certain Group companies, such as EasyDec, when the potential for development in the medical sector is already of a certain size. For EasyDec, the opportunity arose to move into the production of needles for sewing heart valves. We would have no interest in doing this only in a small market, the problem being to set up the whole structure that accompanies this change of market for a company. Obtaining ISO13485 certification is particularly important for companies in the medical sector, and to stay with the EasyDec example, they are in the process of obtaining it, supported by Renaud Cuenot, Director of Project Management for the Medtech Division. In particular, he is assisting them with all project-related documentation. The parts are just as technical as those used in the watchmaking industry, but the reflexes required on the medtech side are different.
We also have a fine example of development towards medtech with another Group company, Pierhor-Gasser, which produces rubies for the watchmaking industry and on which we are due to launch a major market for medical rubies used as insulators for pacemakers. Certification was therefore launched three years ago, and it’s a market that the company can easily invest in, which would probably not have been the case had it not been part of the Group. What’s interesting for the Acrotec Group is definitely to be considered as a one-stop shop. Taking ruby production as an example, we’re able to respond to quality processes, we’re able to integrate them, and if need be, we can sell these rubies through another medtech company, which can include them in its quality system to reassure customers.
Enfin, je rajouterais que nous avons également une personne dédiée au sein du groupe qui peut accompagner les entreprises dans leur audit. À savoir que toutes les sociétés du groupe conservent leur système de management de la qualité. Chaque entreprise a en effet son ERP, des process, des domaines d’application et des clients tellement spécifiques que cette approche de globalisation sur ce point n’est pas pertinente. L’audit des entreprises permet ainsi une harmonisation avec des process qualités au même niveau dans toutes les sociétés.
What is your outlook for the second half of the year and the year ahead?
In terms of acquiring new companies for the Medtech division, we’re also talking to some smaller companies that could bring us a new technology, such as 3D printing.
At the same time, we’re talking to some large companies that are going to be real platforms with several production sites. Our spectrum is quite broad, the priority for us being to have companies that operate independently (with the help of our support, of course), with good results, a management team that remains after integration into the Acrotec Medtech division and, above all, the acquisition must bring something to the group in a strategic way.
We’re one of the few groups in this industry to be present on three continents, so that’s a strength for us. Our presence at the world’s leading medtech trade fairs also gives us a high profile, both with our customers and with other companies interested in joining us.
In the second quarter of 2023, we encountered a number of difficulties in our markets, which are shared by our competitors. A case in point is the excessive inventories held today by our customers, who had ordered far too much post-Covid.
This year, however, we’re on the road to renewed growth, with a target of double-digit annual organic growth, enabling us to double our sales within five years. This will require substantial investment to expand certain sites and add machines. The second half of 2024 promises to be even better, with sustained growth. In particular, there’s been a good recovery in the United States, where many projects that had been put on hold will start up this summer or just after. So we’re expecting a good year, and the outlook for 2025 is also very positive. So we’re confident about the future!