1. PSD Associates
. . . aligning human capital with business strategy
Paul Davit
Managing Principal
732.672.7599
paul.davit@psdassociatesllc.com
www.linkedin.com/in/pauldavit
Case Study: “Ride The Roller Coaster”
Theme: Change Management
The Company/Client
Enzon Pharmaceuticals is a biopharmaceutical company that develops, manufactures and commercializes
medicines for cancer and other life-threatening conditions with 2008 annual revenues of $500 million and 450
employees. In 2010 the company re-oriented its strategy to divest all of its commercial assets and refocus
resources on promising R&D programs of innovative cancer therapeutics. The current company has annual
revenues of approximately $50 million and 40 employees.
The Challenge
In early 2008 the activist investor, Carl Icahn, acquired a stake in the company and subsequently two seats on the
Board. In order to increase shareholder value they pressed to split the company into two separate publicly traded
companies; one would be a specialty pharmaceutical company containing the commercial products and
manufacturing groups, and the other a stand-alone biotechnology research-based company.
Several months after the split of Enzon into two publicly traded companies was announced but not finalized,
buyers came forward to purchase the specialty pharmaceutical business. Enzon moved forward on the sale process
with a finalist buyer; but due to the Fall 2008 credit crisis, the buyer was unable to secure enough credit to
complete the deal and it fell through. A depressed stock market made it impossible to split the company into two.
So, the management team had to unwind the organizational changes that had been made or announced in the
previous 6 months. This roller coaster ride - of first being split into two publically traded companies, then
potentially selling half the business and then being recombined back into one company - created the most negative
morale and employee disengagement I had ever seen. Mass confusion emerged over what was happening,
especially what the future held for the company and each individual. Everyone seemed to have their own idea of
what it meant for them, either positive or negative.
Actions Taken
Initially my main priority was to manage the transfer of human capital assets to the purchaser. This included
identifying the employees that were to be offered jobs with the new company and transferring all personnel
information. I organized meetings with the acquirer, especially their HR team, to provide insights into how we ran
the business from a human capital perspective and provide information regarding employee backgrounds,
performance and compensation. I also facilitated meetings between functional heads to make sure both parties
received the information required to manage a smooth transition to the acquirer.
Since the buyer was foreign-owned with only a small presence in the US, I became involved in helping them set
up the appropriate infrastructure required to operate from a human capital perspective. That meant identifying
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2. insurance brokers, reviewing and recommending benefits plans, providing instruction on how to set up an
appropriate compensation structure and working with the sales force.
Once the sale of the commercial business fell through, my agenda shifted to refocusing on employee
communications, specifically:



organizing and holding town hall and small group meetings to explain what had happened with the deal
and where the company was headed and why;
continuing my one-on-one meetings with key employees to manage any morale issues that had emerged;
helping the CEO and VP of Sales and Marketing organize a national sales force meeting to gain
alignment on the changes and the recombined company.
The Results
With the announcement of the sale of the commercial business, the employees feared for their jobs. Initially, they
felt very comfortable and upbeat about becoming a stand-alone company. Then they were shocked into thinking
what would happen by being acquired into a different company in a different location with a different culture.
All were then relieved when the deal fell through, creating the feeling that everything would go back to the way it
was. Navigating this roller coaster ride by careful attention to employee communications, we averted the turnover
of key employees deemed essential to the commercial business.
Those employees going with the biotechnology company were initially frightened because of the financial
constraints put on that business. Their initial fears were that reduced funding would eliminate favored projects and
possibly their jobs. Once the organization chose to remain as one company, the potential for defection dropped, as
on-going employee communications increased engagement and alignment with the strategy.
The communications strategy implemented by management caused both entities to avert significant costs related
to retaining and staffing the operations.
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©2012 PSD Associates, LLC