A Houston medical company is in the process of being acquired by a Seattle health tech business. Image via 2nd.md

A West Coast health tech company has announced the acquisition of Houston-based 2nd.MD.

Accolade Inc., which uses technology solutions to help users better understand their benefits and the health care system, announced last week that it has signed a definitive agreement to acquire Houston-based expert medical opinion company 2nd.MD.

The goal of the acquisition is to further simplify the healthcare experience for employees and increase return on investment for employers, according to a press release from Accolade, and the company will continue to offer 2nd.MD's service on a stand-alone basis as well.

"We share a common vision to help every person live their healthiest life by dramatically improving quality and accessibility of care through a people-focused, clinically-driven support model," says Rajeev Singh, CEO of Accolade, in the release. "Bringing 2nd.MD's world-class Care Team and digital approach with expert medical consultation into Accolade, and continuing to offer it on a stand-alone basis, will have an immediate and measurable impact for our customers, their employees, and the health plans we work with."

"Both companies have built deep relationships with employers and health plans by helping employees navigate the increasingly complex and inconsistent healthcare system," Singh continues. "With the addition of 2nd.MD, we'll nearly double our total addressable market while providing the most comprehensive, integrated healthcare navigation experience available."

2nd.MD supports over 300 employers — connecting more than 7 million people to over 900 nationally recognized, board-certified medical specialists. According to the release, the company reported unaudited revenues of approximately $35 million.

"When it is you or a loved one facing a serious health decision, waiting for weeks to receive a second opinion from an expert isn't acceptable. We've built a scalable Expert Medical Opinion offering that treats every member like family," says Jason Melton, CEO of 2nd.MD. "Combining our Care Teams and technology with Accolade will enhance the reach and quality of support to members from the moment of crisis to the other side of treatment on the path to wellness. We share a common business vision, our cultures are highly aligned around employee purpose and we share a common mission to change healthcare for the benefit of all consumers."

Elizabeth Gerbel, CEO and founder of Houston-based E.A.G. Services Inc., shares how to navigate M&A activity for both startups and large companies. Pexels

All is not lost in a merger or acquisition, says this Houston energy exec

Guest column

Nervous about an upcoming merger or acquisition? You're not alone. Last year, there were nearly 15,000 mergers and acquisitions in the U.S., according to the Institute for Mergers, Acquisitions and Alliances. These transactions, although executed with optimistic intentions, don't always work out. What is it that separates those that deliver from those whose results simply fall flat?

While you won the legal battle, the real culprit to a failed merger or acquisition transaction lies in post-deal activities such as integrating the divesting company's assets into the acquiring company's existing systems, processes, and organizational structure. If executed poorly, companies could face several hurdles, including:

  • Increased acquisition costs
  • Loss in previously efficient business processes
  • Reduced data quality in current and acquired assets
  • Extended TSA timeline

With the stakes being high, it is critical for each step of a merger or acquisition to be rock solid before moving on to the next stage. In fact, when executed successfully, an M&A transaction can significantly benefit both companies — from startups to well-established corporations.

A strategy for M&A data integration

In order to facilitate efficient and effective merger or acquisition, the critical success factors focus on these driving goals: Minimizing organizational disruption and Maximizing ROI. To achieve these goals, we execute three main stages for every merger and acquisition.

  1. Planning
  2. Analysis
  3. Execution

We start with thorough planning, think of planning as the foundation for a successful merger or acquisition. Without a good plan, the company will be vulnerable to all sorts of structural weaknesses. To prevent key elements from falling through the cracks, companies must define objectives and data requirements, maintain strong communications, and develop both short-term and long-term expectations.

The next step – analysis – since data is absolutely essential in mergers and acquisitions. There is a lot to watch out for: What's the best way to extract and convert the acquired data? Will IT or business support need to be permanently added? What system configuration changes are required? What are the impacts to current business processes and internal audit controls? Will additional training be required? The answers to these questions are highly individualized to each merger and acquisition, and they'll impact how seamless the transition will be. Many people gloss over this stage but then realize the criticality not only in the case of a merger or acquisition but also in the case of a future divestiture.

Finally, the last stage: Execution. This stage is one of the main reasons why some mergers and acquisitions may fall short of expectations. To avoid common issues stemming from poor execution – including disruption of previously effective business processes, impaired customer service, and increase in the cost of the merger or acquisition – we coordinate roles and responsibilities, ensuring that all key tasks are executed. From day one to full integration, we continually monitor to ensure the company is on track to meet its initially defined objectives.

The risks and benefits of a merger or acquisition

I'll be candid: Without a solid foundation through adequate preparation, a merger or acquisition is set up to fail. This risk can be higher for startups and small companies, which don't have the resource buffer that some larger firms can fall back on. Large companies may face a different risk, business processes and data may not be aligned with their current state. And yet, according to Economy Watch, an extensively strategized merger or acquisition transaction, beyond increasing the company's size, can yield significant benefits that include:

  • Improving its strategic position
  • Entering a new market
  • Developing new assets
  • Lowering operational costs
  • Expanding market influence

For smooth mergers and acquisitions, we recommend a multi-step process so that you can identify and reduce risks, condense your integration timeline, and quickly capture value. Because despite the challenges, not all is lost during a merger or acquisition – and there is much to be gained.

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Elizabeth Gerbel is the CEO and founder of Houston-based E.A.G. Services Inc.

International beauty giant Shiseido Company Ltd. has acquired Houston-founded Drunk Elephant. Photo via Business Wire

Houstonian's skincare line acquired for $845 million

A beautiful acquisition

A skincare line with ties to Houston is joining the ranks of other popular beauty brands this week. International beauty giant Shiseido Company Ltd. has announced that it is acquiring Drunk Elephant in a reported $845 million deal.

Houstonian Tiffany Masterson, chief creative officer, founded the company in Houston in 2012. The quality of products and playful branding attracted a broad range of demographics as the company experienced exponential growth.

"I started this business as an industry outsider, and from the beginning I did things a little differently," Masterson says in a news release. "To join with a powerhouse beauty company such as Shiseido that leads the industry in innovation and global excellence is a dream come true for me and for Drunk Elephant. We share similar values, most importantly an unwavering commitment to the consumer. I chose a partner who will let the brand continue to be itself, with the same formulations and the same team."

According to the release, the acquisition will allow Drunk Elephant's products to expand more throughout America, and enter new markets in Asian and Europe. The new subsidiary will also have support from Shiseido's Global Innovation Center and Digital Center of Excellence.

"This transaction is squarely aligned with Shiseido's VISION 2020 goal of accelerating growth and creating value through strategic partnerships," says Masahiko Uotani, president and CEO of Shiseido, in a news release. "I am very pleased to welcome Tiffany and the Drunk Elephant team to the Shiseido Family and together, pursue our long-term mission of 'Beauty innovations for a better world.'"

Masterson will maintain her role as chief creative officer and add the title of president for the company. She will report to Marc Rey, CEO of Shiseido Americas and chief growth officer of Shiseido.

"Drunk Elephant is built on a strong brand foundation and a unique philosophy that fits perfectly with Shiseido's values and skincare heritage," Rey says in the release. "Our innovative and people-first cultures are well aligned, and we share an unwavering commitment to our consumers. I also believe the brand will contribute to the business performance of Shiseido Americas."

The beauty industry is having a bit of a moment right now as consumers — who have shelves and shelves of products to choose from — are drawn to specific products.

"While reasons for acquisitions in the beauty space vary, we are seeing that some of the big players are seeking to balance their portfolios by creating products and services that consumers find relevant," says Laura Gurski, Accenture's global lead for consumer goods and services, in a statement.

"It is crucial that brands completely reinvent the beauty experience, making it much more than a transactional event," she continues. "This is what startups and disruptors do best. They create a collaboration with each consumer, allowing them to participate and experience products, services and brands in new ways."

According to Accenture Strategy's research on M&A in consumer goods, companies acquiring new capabilities represents 47 percent of activity and new technologies represents 35 percent of activity. These figures are on par with more traditional reasons for M&A, like new industries (43 percent) and new geographic markets (37 percent).

"For the first time, beauty companies have the opportunity to achieve real differentiation by taking their relationships with consumers to a completely new level," Gurski says.

Houston-based Memorial Hermann could soon be part of one of the largest health care networks in Texas. Photo via memorialhermann.org

2 major Texas hospital systems merge with service and innovation in mind

2 for 1

Two powerhouse medical centers have decided to team up to become one of the largest health care systems in Texas.

Houston-based Memorial Hermann Health System and Dallas-based Baylor Scott & White Health's board members signed a letter of intent to merge and create a combined system, according to an October 1 press release. A definitive agreement is expected to be complete in 2019.

"Together, we believe we will be able to accelerate our commitments to make care more consumer centric; grow our capabilities to manage the health of populations; and bend the unsustainable healthcare cost curve in the state," says Chuck Stokes, president and CEO of Memorial Hermann, in the release. "Through this combined system, we have a unique opportunity to reinvent healthcare and make a profound difference in the lives of millions of Texans."

The two systems together have over 68 hospital campuses, 1,100 care delivery sites, almost 14,000 physicians, and serve almost 10 million patients each year, according to the release.

The combined organization will operate under a unified board, led by Ross McKnight, the current chair of the Baylor Scott & White Holdings Board of Trustees. A vice chair will be selected by Memorial Hermann and will serve as the chair after McKnight's two-year term.

Jim Hinton, current CEO of Baylor Scott & White, will be the CEO. Stokes will serve in the proposed office of the CEO, along with current Baylor Scott & White president, Pete McCanna.

"Baylor Scott & White was founded as a Christian ministry more than 100 years ago; ever since, it has advanced health and driven change in North and Central Texas," McKnight says in the release. "This proposed combination starts the next chapter in the legacies of service and innovation for both systems. It will not only make a positive difference in the lives of millions here, it will become a national model."

Both organizations will maintain their brands and names locally. Executive and support staff will be based in the cities where the two entities currently have operations: Austin, Dallas, Houston, and Temple.

"This is about two mission-driven organizations — both committed to making safe, high-quality healthcare more convenient and affordable — building something transformative together," Hinton says in the release. "We must lead the change in our industry, while insisting we continue to fulfill our unwavering commitments to meeting the needs of all Texans."

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Photos: Here's a sneak peek at The Ion Houston's construction progress

eye on the ion

The Ion Houston is expected to open its doors this year, and the building's exterior is close to completion. Now, the construction team is focusing on interiors and then tenant build outs.

The 270,000-square-foot coworking and innovation hub owned and managed by Rice Management Co. is slated to be a convening building for startups, corporations, academic partners, investors, and more. The building is organized as follows:

  • The underground Lower Level will act as academic flex space with a few classrooms and open-concept desks for The Ion's accelerators, including: The Ion Smart and Resilient Cities Accelerator, DivInc, the Rice Alliance's Clean Energy Accelerator, and the Aerospace Innovation Hub and Accelerator. There will also be an event space and The Ion's own programming.
  • On the first, street-level floor, The Ion's restaurant tenants will reside with access from both the greenspace as well as into the building. The Ion's first three restaurant tenants include: Late August, Common Bond, and STUFF'd Wings.
  • Additionally, the first floor will be home to a venture studio and the prototyping lab. There is additional space available for other tenants.
  • On the second floor, there will be 58,000 square feet of coworking space managed by Common Desk. Note: For floors 2 and up of the Ion, tenants will have access cards that allow them entrance. The first and lower floors will not require access cards.
  • The third floor of the building will house eight to 10 tenants each with 5,000 to 10,000 square feet of space. Chevron was announced as the first tenant and will reside on this floor.
  • On the fourth and fifth floors, The Ion will house one to two larger tenants on each level. These levels of the building were added on to the existing structure. The fourth floor features two balconies that tenants will have access to. Microsoft is signed on to have its space on half of the fifth floor.
The Ion is still planning on an open date in late spring or summer. For leasing information, click here. Scroll through the slideshow of construction images and renderings to see the progress of the building.

Exterior nears completion

Photo by Natalie Harms

The building's exterior is almost complete and kept much of the original building's facade. The new materials brought in match the existing color scheme.

Texas winery taps Houston tech company for innovative AR experience

cheers

The Lone Star State is home to a vibrant and innovative wine scene, but, just like most hospitality businesses, winemakers missed the opportunity to engage with their patrons amid the pandemic. With a new idea of how to engage its customers, Messina Hof, an award-winning Texas winery, rolled out a new tech-optimized, at-home experience.

The winery partnered with VISION, a Houston-based production group, to create an augmented reality app. Combining the efforts of Messina Hof's in-house label design team and the animation capabilities of VISION, the app took four months to design.

"It was a labor of love for both parties to be able to experiment with this; it was uncharted territory," says Karen Bonarrigo, owner and chief administrative officer of Messina Hof.

The three wines released — Emblaze (Sweet Red), Vitality (Dry White), and Abounding (Dry Red) — each tells a story through the AR experience.

"We wanted to try not only and push the technology as far as we can push it, but also try to really incorporate some heavy storytelling," says Dan Pratt, VISION Creative Director.

The idea to incorporate technology felt like a natural one to Bonariggo.

"The earth, water, and sunshine all go into developing what the profile is for each wine," explains Bonarrigo.

Each of the three wines have scannable labels that bring up a VR experience for app users. Photo courtesy of Messina Hof

VISION, who worked alongside Messina Hof to develop the project, blended the winery's rich family ties with the Old World history of winemaking.

When customers download the app and hold their camera over the label, a trailing vine emerges onto the screen and wraps around the bottle. As vines grow around each bottle, the three each visually signify a different natural element of winemaking — earth, water and the sun. As a rustic sign emerges, it prompts users to then click for recipe pairing recommendations.

Rather than a single-use experience, Messina Hof and VISION wanted to create an app that users could both engage with and learn from. The AR app allows users to view recipes and browse wines in one place.

"We knew we wanted the app to be functional for people to be able to interact with both when they're doing the AR experience, but then also to be able to continue to come back to it later," shares Bonarrigo. While AR wine labels have emerged in some California vineyards, she says, "it's definitely uncharted territory for the Texas industry."

Overseeing the food and wine pairing at Messina Hof is one of Bonarrigo's passions, so it was a natural choice to include recipes in the app. Messina Hof offers a concept called Vineyard Cuisine, coined from the Bonarrigo family cookbook, and incorporates wine in every meal at the vineyard.

"The idea of tying [the wine] to a recipe gave us the opportunity to be able to share new ways [our customers] could use wines in their everyday cooking," she explains.

She hopes the app's recipe feature will help families connect together.

"So often we get used to sitting down at the table, eating really quickly, and then moving on to the next thing, but there's so much connection that can happen with each other when we can slow down a little bit and have a conversation," she continues.

To Pratt, AR was the perfect way to emphasize and expand on the shared experience of wine.

"We wanted this to be an extension of that experience for people. You know, based on the love of wine and laughter with friends," he says.

For those who can't currently gather in a room together, Bonarrigo has hopes that Messina Hof can bring people together from afar.

"I think now more than ever the ability for our regular customers, even within Texas, to then share those wines with family members or friends that are outside the state seems more intuitive," she explains.

"We are so used to being creatures of habit in sharing our wine face-to-face with people that when we had the unexpected opportunity to not do that, we realized that we still have ways to be able to connect with customers through technology," says Bonarrigo.

She finds the "ease of access of being able to connect with them through the online web store" has kept Messina Hof in touch with customers throughout the pandemic, as well as digital happy hours and tasting events.

Messina Hof Harvest Green Winery & Kitchen, the newest location, opened in February, becoming the Greater Houston-area's largest winery. The space features an expansive tasting room and 83-foot wine bar, full-service restaurant, covered patio, two private tasting rooms, a wine production, barrel room, and wine warehouse.

"We knew that when we launched that location that we wanted to be able to have a series of wines at that location that was special, but also out of the box," says Bonarrigo.

Bonarrigo and her husband Paul have ushered in the expansion of Messina Hof over the last nine years. The family business began in 1977 when Paul's parents, Paul Vincent and Merrill, started an experimental vineyard. Messina Hof has locations in Bryan, Grapevine, Fredericksburg, and Richmond.

"This is our largest winery expansion endeavor that we've done," she says. "We wanted the wines to be extra special."

Similar to Messina Hof, companies across industries are seeking to explore interactive technologies to reach their customer base. "A number of our clients, and also new clients that we may not have been able to reach before, have certainly reached out to us to figure out new ways to reach an audience," shares Pratt.

Winemaking may be an Old World skill, but Messina Hof is excited to bring Texas wine into the future.

"So much of winemaking is science, and so much of it is art. There's always this push and pull as to which is more of a majority in the end product," explains Bonarrigo, who notes that Messina Hof has been using technology to innovate and optimize the growing process. The new AR app is a push toward bringing the experience her family loves into the homes of customers.

"This definitely gives a new talking point to wine," she says.