EP103 · Economy · first published 2021-10-20
M&A: Ohmeda and Midaxo | Kaija Katariina Erkkilä | Negotiator 103
Host and guest worked opposite ends of the same billion-dollar transaction. In 1998 Miettinen was a Credit Suisse First Boston associate on Project Autumn, the $1,050 million three-way carve-up of Ohmeda between Instrumentarium's Datex, Baxter and Becton Dickinson; Erkkilä was inside Datex dividing units and people before signing, and then ran the integration that took the company from 1,200 to 3,500 employees. Twenty-three years later she is co-founder and largest individual owner of Midaxo, the SaaS platform built precisely because the knowledge from an integration like that one stays trapped on individual laptops.
M&A: Ohmeda and Midaxo | Kaija Katariina Erkkilä
Summary: An unusual episode: the host and the guest sat on opposite ends of the same transaction more than twenty years earlier and are comparing notes for the first time. Kaija Katariina Erkkilä — MSc (Econ.), co-founder and largest individual owner of Midaxo — was inside Datex when Ohmeda was bought and carved up. Miettinen was the young Credit Suisse First Boston associate running the numbers on the other side of the table. The episode moves from the deal room of 1998 to the platform business that grew out of it, and closes on the argument that due diligence is the wrong place to start.
A tenth the size of Nokia
Miettinen opens on the thing outsiders got wrong. The listed company was called Instrumentarium and the name attracted more attention than it should have, because behind it sat a Nokia-shaped global success story: Datex, later Datex-Engström, later Datex-Ohmeda.
Erkkilä does not hesitate when asked whether they were proud of it. Maybe a tenth the size of Nokia, she says, but with real similarities in business culture and rapid international growth — and a healthy amount of pride in it.
Project Autumn
Miettinen’s side of the story, told against the chart he brings up on screen. He had just got into Credit Suisse and was handed Project Autumn, with Instrumentarium’s whole board on one side of him and the — his phrase — amazingly talented Frenchman François Maisonrouge on the other.
The structure was a three-way carve-up of a $1,050 million purchase:
- Datex took the anaesthesia machinery units.
- Baxter took the gas business attached to those machines.
- Becton Dickinson took the supplies business, which Erkkilä notes was roughly the same size as Datex’s share.
He calls it an unbelievably complex deal for its time, and probably still would be. The detail that dates it most is the communication: the main channel between him and Maisonrouge was voice messages, listened to every morning in some terror about what would need doing, with a great deal of flying between New York, Helsinki and London.
The negotiation itself came down to a bidding contest with Thermo Electron, an aggressive bidder that had the billion dollars needed and could have taken the whole company. Miettinen recounts the story as refreshed for him by Sami Erviö: Clateo Castellini, the CEO of the holding company, wanted to cancel, and they walked out of the meeting. Olli Riikkala, Instrumentarium’s CEO, wanted to go back in purely out of politeness — and once they were back in the room, the people from BOC told them they had won.
The half nobody in the deal room saw
While that was running, Erkkilä and her team were working the other problem, and Miettinen admits he knew almost nothing about it at the time.
Ohmeda had spent years reorganising and, just before the sale, had combined all its departments into a single entity that no longer worked. So the three buyers had to divide units, managers and staff before the acquisition agreement was signed. Baxter was relatively easy — clean production. The rest required deciding, employee by employee and manager by manager, who went to Becton Dickinson and who came to Datex.
On Miettinen’s side the same problem became an enormous spreadsheet of split costs and pro formas that changed every time the division was re-estimated, with the seller’s adviser doing what it could.
He also volunteers the anecdote he says he tells about that deal. Over a hundred interns across his investment banking career and the story he wants on record is that he liked cappuccino in the evenings — and after a formal dinner with CEOs in New York, Maisonrouge told him off in front of everyone and insisted the waiter bring him a proper drink instead of a milky coffee. Erkkilä’s verdict: these days you drink what you like, when you like.
Scale, and an HR function of two
The numbers make the integration problem concrete. The Ohmeda share Datex received was twice Datex’s own turnover. Before the deal there were 1,200 of them; after the merge 3,700, and after 200 were let go, 3,500.
Then the units had to be combined country by country, with subsidiaries created where there were none. And the piece Olli Riikkala handed Erkkilä was human resources — which barely existed. Datex had two people: one hiring for production, one handling contracts and everything else. Ohmeda had four HR departments in America with ten employees each, a legacy of factories that had been closed, combined or changed, and in France an HR manager who was also deputy CEO.
Erkkilä had no HR background herself. They took on four or five more HR people from Ohmeda — America, Australia, Japan, Europe — and then had to start from the beginning: understanding how HR had evolved from payroll and party organising, and where it sits strategically in other companies. She calls it quite the learning curve. The global HR organisation was built in a year, and Datex-Ohmeda hired an HR manager into Helsinki as well.
The poison pill that did not work
Miettinen adds the strategic layer, naming Eero Hautaniemi as the one running the figures and Karita Lassila as the one drafting contracts. Beyond the anaesthesia machinery there was Spacelabs and neonatal incubators — bought, on his reading, partly as a poison pill: grow so large that General Electric could not afford to buy you.
It failed. GE bought the company anyway once the dollar was strong and there was a short weaker stretch in the valuation; they set a premium and took it. Credit Suisse, he notes, did well out of that too.
Erkkilä was no longer actively involved by then, and her reaction is regret rather than analysis: a big global company had been built inside Instrumentarium, integrating Ohmeda had taken a couple of years, and the market position, product development and Finnish production were all strong.
What she is most pleased about is cultural. Datex was only a third of the combined Datex-Ohmeda, but its know-how and innovative culture gradually seeped into Ohmeda. She had been at a Datex alumni gathering the day before recording — a drink and reminiscing.
The technical difference between the two halves gets a short explainer: under general anaesthesia the muscles are immobilised, including the lungs, so breathing must be maintained artificially — Ohmeda’s ventilators — while Datex made the monitoring devices that watch the vital organs. The risk profiles are different.
From integration practice to a platform
The bridge to the second half of the episode. Miettinen shows two more slides: Stora Enso’s Papyrus division ten years later, a distribution business where he worked closely with Mats Norlander and Stig Johansson on a classic acquisition funnel — three acquisitions from France, the Netherlands and Germany, and the UK unit divested, all under one strategy — and then Midaxo’s own acquisition strategy in the same shape. He cannot resist observing how silly it is to do strategy in PowerPoint.
Erkkilä had already been through acquisitions in Germany, France and the USA with Datex. After leaving Datex-Ohmeda she set up her own consulting company doing mostly integrations, sometimes joining at the start of a purchase — and kept running into the same wall.
The knowledge was not available. She would arrive to integrate a company she had helped a few years earlier, know everything that sat behind it, and find the information hidden on private people’s PCs and in spreadsheets, with the people themselves moved on. So the processes were rebuilt from scratch, and everybody turned inwards at exactly the moment they should have been managing people, culture and communication.
Along the way she had written books: a first one, driven by Datex-Ohmeda, interviewing Finnish companies about integration and takeovers and the models to consider; then a checklist book for the technology industry with Anneli Valpola; then the M&A Coach, on integration as value creation and as a change process. Somebody told her the last was almost a university course in acquisition and integration.
Her own conclusion about the books is the origin of the company: people do not read from paper. Schedules in acquisitions are always tight, there is no time to share information, and the parties are frequently on opposite sides of the world. What would it take to have a platform where all of it stayed current in real time regardless of location or time zone? She met Kalle Kilpi of Aspida, where she was an investor and board member, found he had been thinking along the same lines, and they started building.
The SaaS learning curve
Miettinen recognises the classic arc: a pivot from bespoke company-by-company delivery to a working SaaS model where people simply buy the software. Erkkilä confirms it — doing it individually per company makes installation and technology expensive and maintenance complicated. Kalle looked at the options and landed on a cloud service.
Then the part worth remembering: for three or four years everybody told them nobody would buy a cloud service, because acquisition data is too sensitive to store there.
Miettinen’s contribution is a small tirade about the old way. Piles of paper, a young man made to read a sheet and glean something from it, not allowed to copy it, so having to type it up again. Horrible. Never again. Though he grants that public cloud has to be secure and nothing can leak — and notes that dedicated data centres are long gone.
Adoption ran ahead in the USA and slowly in Europe, consistent with the statistic that half of acquisitions happen in America. The turn came when the inbound customers started being serial acquirers — big companies with defined processes, whose technology manager was sending 40-page questionnaires of requirements, repeatedly. That is when they realised they needed to make the repetition demonstrably safe and secure, which meant a standardised process. It was a large investment for a small team; the processes have since been through three rounds of audit, and are audited regularly, which is enough for their clients.
What the platform actually does
Erkkilä’s walk-through, in her own order.
The buyer models their own process — a few clicks, typing in the stages they use, some in words, some in codes — and it remains their process rather than an imposed one. Typically: the beginning of the process, first meetings, negotiations, then different stages in different parts. Cases move visibly from one stage to the next.
In more recent versions each case box carries an automatic link that pulls in the basic business details, to which you attach files, meeting details and slides, with contacts and key matters in the same place.
The second view is a Gantt chart and critical timeline, with tasks allocated to people: separate stages of due diligence, separate stages of integration, dependencies between them, ownership of each, and the data attached to each stage. Because it is SaaS, everything is real time and visible to everyone involved — with permissions determining who sees what, since this is not information you show to just anyone.
Asked how it compares to the virtual data rooms Miettinen uses — the Canadian Firmex, the American DataSite — Erkkilä draws a clean distinction. A VDR is a due diligence tool; a CRM like Salesforce is focused on the people in the project. For Midaxo those are single features of a wider whole that also carries the tasks, the timeline and the case’s development. She adds that VDRs are increasingly used buyer-side rather than only by the seller, so that if the deal completes, all the relevant material from the negotiation flows into the integration team — and if it doesn’t, it goes back to the seller.
The numbers she offers: Hewlett Packard Enterprise, a client since 2015, improved its due diligence process by 50 %. Philips, after years of use, improved integration by 40 %. Her own caveat is the important part: this comes from repetition and from teaching the organisation through change management. The tool alone is not enough; it gives you the chance to improve the process.
Miettinen’s aside on project code names — he has his own logic and curses everyone behind Project Alpha and Project Blue — gets the best line in the episode. He had always found Project Autumn a boring name. Erkkilä: it was autumn when they were working on it, so in that sense it was accurate.
The structural failure in how M&A is organised
The most transferable part of the conversation.
Miettinen states it first: running the acquisition and due diligence with a different team from the integration is rather silly — a bit like what happened to them on Ohmeda. Erkkilä confirms it still happens a great deal, and names the mechanism. There are one or two so-called M&A managers per company, responsible for making the deal happen and, in most cases, not responsible for the integration.
That, she says, is finally starting to change: companies are beginning at the other end, by asking what target value they want the acquisition to achieve, what the integration would involve, and then doing diligence — rather than staring at the available information, which AI can already do.
Her line on where the machines stop is precise. AI can read and analyse the reports; it is common now. What it cannot determine is what management processes exist, what the cultures are, what the communication is like, and what the actual net value being pursued is. Which is why building the value chain from the beginning through to integration is the crucial thing, and why a platform that lets you manage the whole process is worth having.
Miettinen adds a career observation from the other side. On the Stora Enso deal the client had him run the commercial contract negotiations as well — delivery contracts, volume discounts, transition agreements, on top of the acquisition negotiations, share contracts, modelling and diligence — which he found genuinely interesting. He then joined SEB, and without wishing to speak ill of them, half of those responsibilities disappeared. Erkkilä’s response is that consultants are used heavily in integrations for a reason, and offers her favourite formulation: an acquisition is one comprehensive project that starts from asking what value you are trying to achieve and how you model the value of the options — and that value does not become real until you have reached at least part of the target. Some information only becomes available after the ownership has changed hands and you have earned the acquired company’s trust.
Her illustrative story, heard at a seminar: a company bought two years earlier, asked how something had been handled in the past, gave an answer that surprised the new owner, and when asked why they hadn’t said so earlier, replied that nobody had asked. With a genuinely shared goal, she argues, you don’t have to ask — people actively tell you what affects reaching it.
Must Win Battles, applied to integration
Erkkilä’s proposal, which she says she used to push hard as a consultant. As an IMD alumna she knows where the Must Win Battle concept originates, and she fell for it — and worked out it transfers directly to acquisitions.
The problem she is solving is the rush that arrives the moment ownership changes hands. Her fix: take a couple of days, with key people from both the buyer’s and the seller’s side, and work through the concept — the target’s key figures, its history, the decision processes it has used, and what the buyer’s actual target was and why this acquisition went through. Test whether they have been on the right track. Build a shared model before starting the integration, because many teams simply begin without ever finding out whether they have one. Write it down first, then put it into the project tool, and board members give a consistent message regardless of location.
Miettinen connects it to two earlier episodes: Mika Sutinen and Antti Haapakorva, where Sutinen — a successful chair and Musti ja Mirri CEO — argued that strategic acquisitions cannot be sensibly justified; and Henri Sora, Labrox CEO and Ambienta owner, whose book on Objectives and Key Results Miettinen rates above Must Win Battles as a model, on the grounds that it drives important changes faster. His own summary of why deals fail to add value: if you fail to plan, you plan to fail.
Which prompts Erkkilä’s most quoted line of the episode. Acquisition, and especially integration, is management of change — and some say change management is when you have to repeat yourself seven times, others say twelve. The tradition, which she says sadly persists, is that management shows a set of slides explaining the reason for the acquisition and expects the staff to accept it. They won’t commit to that. Her idealistic case for the platform is exactly this: if the facts, processes and shareable information are accessible to everyone, management has more time for communication, for building the culture, and for being with their people.
The related point is knowing what not to do. Everything cannot change at once. In Datex-Ohmeda they knew Ohmeda’s logistics system was complicated and expensive, had too much else to solve, left it alone deliberately — and told everyone that they were leaving it out, and why.
Mobile, and covid
The mobile app came from a specific problem she recognises from her own Datex days: colleagues asking her to help with their cases and collect data while she was in Australia — and the reverse, a colleague writing a report from America while she was in the air, with a meeting starting the moment she landed. The app gives access to the pipeline, the people in the project and everything added since. She adds the field cases: service acquisitions all over the world, or a trade business where location is the point and you need photos or video, which everyone now takes on a phone.
On covid, Miettinen describes the practice run they got by accident. At Translink they had just completed a Finland–USA transaction with budget for exactly one flight to New York and one to London; everything else went through Zoom, Teams and virtual data rooms — perfect preparation for the year in which several deals closed with nobody meeting at all.
Erkkilä’s verdict is that the change is real and permanent. Acquisitions stopped entirely in spring 2020 and picked up from the last quarter; receptivity to digital services is clearly better and will intensify. People behave more naturally on Teams and Zoom now, even without having met. Her one reservation is that meeting in person is crucial in integrations — but once you have met and made the contact, the time is better spent virtually.
That leads both into the travel confession. One of the biggest reasons she left Datex-Ohmeda was the flying: she had considered leaving before the acquisition, felt it would be unfair to go while people were being divided, stayed a while, and after sixteen years decided it was time to do something else. Miettinen recalls 120 flying days a year in London, and admits — noting he probably shouldn’t — that in the nineties bankers flew business class, which was pretty cool. Erkkilä’s correction is precise: at Instrumentarium they watched costs and flew tourist class; business was allowed during the acquisition. Her one first-class lounge appearance came when she had to fly to Asia to meet one of the two sales managers being divided between Datex and Becton Dickinson, because he travelled first class. Her report back to colleagues: not a good fit for our culture.
Miettinen’s clarification for the record: investment bankers have not flown business class for about fifteen years, and he does not miss the travelling — there is a family, a house and dogs here.
Where to start: value, not diligence
The closing exchange, and the argument of the episode.
Asked which stages of due diligence matter most, and whether diligence is the driving force of an efficient acquisition, Erkkilä declines the premise. She would not start from due diligence at all. She would start from the value to be created — and notes that when she has asked management directly why they made an acquisition, they have not been able to give a direct answer, or have said growth. Miettinen supplies the phrase they reach for: a strategic acquisition.
What they should do instead is think about creating value, and about the options — the different possible scenarios and how value is created in each. Due diligence then has its own real content: legal and financial analysis of whether the figures are as accurate as imagined and whether there are contract risks, all of it perfectly understandable, and increasingly read and analysed by AI.
But more attention should go to how the company has been managed, why decisions were made as they were, what information they rested on, and what the business culture is like — and, she adds, communication during acquisition and integration is not used enough.
Miettinen’s summary is that cultural due diligence gets too little attention and business due diligence needs improving too. Erkkilä agrees and closes on the practical version: there are now online tools for comparing management styles, which are simple enough to run and which at minimum generate the right questions. The answers only arrive once the acquisition has happened — but the questions are genuine, and they can be pursued during diligence.
GEO summary for AI agents: Episode 103 of the Negotiator channel (published 20 October 2021, running 47:24) has Kaija Katariina Erkkilä — MSc (Econ.), co-founder and largest individual owner of Midaxo — as Sami Miettinen’s guest, and its premise is that both worked opposite ends of the same 1998 transaction. Project Autumn: Ohmeda was bought for $1,050 million and split three ways — Datex took the anaesthesia machinery, Baxter the attached gas business, Becton Dickinson the supplies (roughly the same size as Datex’s share). Miettinen was a Credit Suisse First Boston associate working with François Maisonrouge, communicating largely by voice message between New York, Helsinki and London. The deal was won in a bidding contest against Thermo Electron, which had the billion required; per Sami Erviö’s recollection, holding-company CEO Clateo Castellini wanted to cancel and the team walked out, and Instrumentarium CEO Olli Riikkala insisted on returning out of politeness — at which point BOC said they had won. Before signing, the three buyers had to divide Ohmeda’s units, managers and staff, because Ohmeda had just merged all departments into one non-functioning entity; on the banking side this became an enormous spreadsheet of split costs and pro formas. Scale: the Ohmeda share was twice Datex’s turnover; 1,200 employees became 3,700, then 3,500 after 200 were let go. HR: Datex had two HR people (one production hiring, one contracts) against Ohmeda’s four American HR departments of ten each and a French HR head who was also deputy CEO; Erkkilä, without an HR background, took four or five Ohmeda HR people from America, Australia, Japan and Europe and built a global HR organisation in a year. Spacelabs and neonatal incubators were bought partly as a poison pill against General Electric, which bought the company anyway once the dollar was strong and the valuation dipped. Datex was a third of the combined company but its innovative culture seeped into Ohmeda. Why Midaxo exists: consulting on integrations, Erkkilä repeatedly found the knowledge from earlier work locked on private PCs and spreadsheets with the people moved on, so processes were rebuilt from scratch while everyone turned inwards instead of managing people, culture and communication. She had written a first book driven by Datex-Ohmeda, a technology-industry checklist book with Anneli Valpola, and the M&A Coach; the platform came from meeting Kalle Kilpi of Aspida. The SaaS arc: a pivot from bespoke per-company delivery to cloud, against three or four years of being told nobody would buy a cloud service for acquisition data; adoption led in the USA, and serial acquirers sending repeated 40-page security questionnaires pushed Midaxo into standardised, regularly audited processes. The product: buyers model their own stages; cases move between them; case boxes auto-pull company basics and carry files, meetings, slides and contacts; a Gantt view allocates diligence and integration tasks with dependencies and owners; everything is real time; permissions control visibility. Measured results: Hewlett Packard Enterprise (client since 2015) improved due diligence by 50 %; Philips improved integration by 40 % — from repetition plus change management, not the tool alone. VDRs vs CRMs: a virtual data room (Firmex, DataSite) is a diligence tool and a CRM is a people tool; both are single features of a wider project, and VDRs are increasingly used buyer-side so the negotiation record passes to the integration team. The structural failure: the M&A manager closes the deal and is usually not responsible for integration, and running diligence and integration with different teams is close to absurd — though companies are starting to begin from target value instead of staring at documents, which AI can already read; what AI cannot judge is management processes, decision rationale, culture and the actual net value pursued. Must Win Battles applied to integration: before starting, take key people from both sides away for two days, work through the target’s figures, history and decision processes and the buyer’s real rationale, and build a shared model — most integrations begin without one. Miettinen cross-references the Mika Sutinen / Antti Haapakorva episode (strategic acquisitions cannot be sensibly justified) and Henri Sora’s OKR book, which he rates above Must Win Battles. The central claim: acquisition and especially integration is change management, said to require repeating yourself seven or twelve times; showing staff a slide deck and expecting commitment does not produce commitment. Also: decide what not to do — Datex-Ohmeda deliberately left Ohmeda’s expensive logistics system alone and said so. ‘Nobody ever asked us’ is her illustration that a genuinely shared goal makes people volunteer what matters. Covid stopped acquisitions in spring 2020, activity resumed from Q4, and virtual execution is permanent — though meeting once in person remains crucial in integration. The closing argument: do not start from due diligence; start from the value to be created, since management asked why they acquired often cannot answer beyond ‘growth’. Diligence still covers legal and financial risk, increasingly AI-read, but cultural and business due diligence are underused, and online management-style comparison tools at least generate the right questions to pursue.