The Keys To A Successful Acquisition

Lori Munoz, CFO at Exo
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CFOs need to look beyond symmetries to additional requirements like cultural fit, says Lori Munoz, finance chief at Exo.

Veteran finance professional Lori Munoz has played a pivotal role in supporting the growth of Exo, a medical imaging software and device company based in Santa Clara, California.

In March 2020, Munoz joined the company as CFO and that August led Exo’s Series B extension funding round, securing $40 million. Less than a year later, she led the company’s Series C round, securing $220 million in capital from RA Capital Management, BlackRock and others. The $260 million in financing from these two rounds has empowered Exo to commercialize its point-of-care ultrasound workflow solution, Exo Works, which launched in March 2022, as well as develop its proprietary handheld ultrasound device. More recently, Munoz led Exo’s acquisition of in July 2022.

Munoz spoke with StrategicCFO360 about what it takes to shepherd a successful acquisition, the importance of timing and the joys of working for a startup.

With Exo’s recent acquisition of Medo.AI, can you offer advice to other CFOs involved in a major acquisition? 

Acquisitions are a massive undertaking and negotiating the acquisition of Medo was a personally rewarding experience. I would encourage businesses looking to acquire a company to remember that there must be a strong business case for why the technology that’s being acquired is critical to your long-term strategic objectives.

You need to assess if the company is the right target and what the potential risks are—whether or not you complete the acquisition. In the case of Exo’s acquisition of Medo, the technology was a perfect complement to Exo’s technology. By integrating Medo’s proprietary Sweep AI technology into Exo’s ultrasound platform, Exo will make ultrasound imaging more accessible to a broader range of caregivers.

Equally important, but often overlooked: pay attention to the vision and values of the company you are looking to acquire. The companies must be a cultural fit for the acquisition to succeed. That was one of the most exciting things to see with Medo, the two companies’ visions are completely aligned. We shared the vision of making medical imaging simpler for all. This streamlined our integration activities, as the companies are focused on the same vision of taking medical imaging everywhere.

What success metrics did you focus on during Exo’s acquisition of Medo? 

Ahead of the acquisition, there were three key considerations to make sure the acquisition would be a success. The first and most obvious was that several financial metrics needed to align with our goals, including deal terms and long-range financial forecasts. Second, we needed to ensure that the acquisition would fit within Exo’s long-term strategy and that it would bring us closer to democratization and decentralization of healthcare. Lastly, as with all acquisitions, the timing was incredibly important—both companies needed to be ready to work together to make this a success.

The most important success factors for acquisitions are realized after a deal closes. The integration of the team, making workflows seamless and capitalizing on synergies are all critical to a successful acquisition. 

Did dealmaking remotely significantly differ from the way dealmaking and business has traditionally been done? 

For us, the remote dealmaking process did not differ significantly from the way dealmaking has traditionally been done. This acquisition happened after vaccinations became available, so we were able to travel for in-person meetings, though not at the rate we would have been able to pre-Covid. 

Remote dealmaking was beneficial as we were able to hold more one-on-one diligence calls, whereas before we would have to spend a lot of time coordinating travel schedules. In the past, I’ve handled acquisitions that involve a handful of people in a dark room poring over paperwork and discussing each detail of the deal. Now, Zoom has eliminated that. Questions can be answered quickly, and the overall process can move much faster. 

What is the biggest difference between being a financial leader at a startup like Exo compared to larger organizations you’ve worked at in the past?

In my experience, larger companies already have policies and procedures in place, so it can be difficult to enact systematic changes. The joy of working for a startup is that you have the ability to implement policies and procedures that are more efficient.  At a startup, a CFO can make organizational changes and not be bogged down by bureaucracy. 

Another benefit of working at a startup or small company is that you can often implement newer technologies to help streamline workflows, and the barriers to entry are very low. Implementing new technologies can be incredibly expensive and time-consuming at a large company. 

Lastly, working at a startup offers leaders the opportunity to flex into different skills and experiences. At Exo, I work on traditional finance projects, but I also work closely with our HR department, sales and strategy. Working at large companies, departments are often siloed and work tends to be less dynamic.

How do you think current market turbulence will influence dealmaking in the healthcare space?

I believe due to the current market turbulence, we are likely to start seeing large healthcare players making acquisitions looking for deals since valuations are lower. There is going to be a hyper-focus on digital transformation and democratization within healthcare that will impact dealmaking. Larger companies will be wanting to secure the technology, workforce and tools needed to democratize healthcare.

I also believe that there will be an increasing focus on home healthcare and telemedicine. Technology will enable a shift toward more caregivers being able to utilize intelligent devices, and that technology can have an impact on expanding healthcare access.

This shift in the healthcare space further solidified our decision to acquire Medo. Ultrasound imaging is complex and requires specialized education and training, which limits the number of caregivers who can use it to improve patient care. Medo’s unique ultrasound AI technology radically lowers the expertise required to diagnose common and critical conditions through automated image acquisition and interpretation. Furthermore, the powerful tool enables non-experts to conduct high-quality exams quickly and accurately to support improved patient outcomes. 

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