The HR function plays an important—if often unrecognized—role in M&A. When it comes to bringing together separate businesses, structures, and cultures, “people make all the difference,” says Lisa Blair Davis, the global head of HR for Johnson & Johnson (J&J) MedTech.
Davis has seen and helped drive substantial growth in the healthcare company’s medical-device business in her 25-plus years with J&J. During that time, the organization has acquired companies in a range of critical segments, including electrophysiology, orthopedics, surgery, and vision. Since 2022, it has spent nearly $30 billion to acquire two companies in the cardiovascular space: Abiomed and, most recently, Shockwave Medical.
In a recent conversation with McKinsey senior partner Andy West, Davis explores topics relating to talent, retention, and what it takes to produce growth-focused M&A. She explains why she believes that HR leadership needs to be involved in the entire M&A process rather than just stepping in after a deal is done. She also shares her insights on the industry and her approaches to leadership and strategy development. An edited version of the conversation follows.
Andy West: Culture and talent are usually at the top of the list of risk factors associated with M&A. You have just done two major deals. How did you get agreement to pursue these growth-focused deals with people, talent, and intellectual property at the center?
Lisa Blair Davis: We start with our portfolio, asking key questions like, “Where does J&J want to compete? In which high-growth segments do we have a strong competitive advantage? Where can we scale or build upon our existing footprint? Where can we best access the patients who need care?” In the case of Abiomed, for instance, cardiovascular is one of the fastest-growing areas in medtech and medical care, and it’s something that J&J really wants to be part of. We wanted to build upon capabilities we already had with electrophysiology, but we also had to approach the deal thinking, “What could we do to make Abiomed even better inside J&J than Abiomed could have done on its own?”
That’s the first part of it. The next step is making these deals successful, and that’s where people come in. HR is involved early in the diligence process, with my team and I asking, “Who are the senior leaders of this organization? Who makes up the board of directors? What are the types of things that are going to be on their minds?” We try to get really smart on that while a lot of the technology assessments and the other parts of diligence are going on. We also engage in conversations on pricing and other topics associated with the diligence process. But I will tell you, at the 11th hour—when it comes down to closing and signing the deal—it’s always about people. It’s all about setting up the company for success within J&J, ensuring they’re welcomed and equipped to continue to grow.
At the 11th hour—when it comes down to closing and signing the deal—it’s always about people. It’s all about setting up the company for success.
Andy West: How do you get share of voice or share of attention on things that can be as amorphous as people- and talent-related issues?
Lisa Blair Davis: J&J, over many years, has invested in this capability, and we have a team at our corporate headquarters that specializes in due diligence. They’re very skilled at what they do, which, in some ways, makes my job much easier. I call them in at the right time, when I know things are starting to heat up. We try to gather as much public data as we can at that stage—before we formally go into diligence. I always want to be as prepared as possible, which is essential to earn the right to have those people-related conversations during diligence.
I want to know what changes of controls we might be dealing with. How long has the senior-leadership team been in place? What organizational factors will be important to them so that we can start to shape and think about what the integration approach would look like? Who do I need from J&J to lead this integration? How do we put the integration team together? We try to anticipate potential concerns or sensitive topics for their senior-leadership team and aim to be as educated as possible. So we’re very clear on what we need to uncover during the diligence phase.
Collaborating throughout the process
Andy West: High-growth assets come with high-growth talent, but not every executive wants to come along. How do you deal with that risk?
Lisa Blair Davis: The worldwide chair of medtech and I meet with the target company’s CEO during the diligence period and say, “Tell me about your team.” The discussion is very open ended. I’m not coming in with a spreadsheet to fill out. It’s more like, “Who’s really important on your team? Help us understand what you know about your team. What’s going to motivate them?” We get a lot of insight that way. On the recent Abiomed deal, I met with both the worldwide chair of the company and its chairman and CEO. And the CEO talked us through his team, telling us what was important to Abiomed’s culture. That information set the framework for us to figure out what other information we needed to get through the diligence process.
Meet with the target company’s CEO during the diligence period and say, ‘Tell me about your team.’ The discussion is very open ended. . . . We get a lot of insight that way.
We followed a similar process recently when we acquired Shockwave Medical—sitting down with the CEO to learn more about his team and what matters most to them. With that information, we can determine who we need to involve in the integration: some roles are important for the integration, but they may not be the right fit for some individuals. A CFO of a publicly traded company isn’t typically going to join us and be a business unit CFO inside of J&J, for example.
There isn’t just one formula, but we do seek to understand the organization we’re acquiring, and what’s important to it, through the seat of the CEO.
Andy West: It sounds more collaborative than people let on.
Lisa Blair Davis: It is. We have to start with a message of, “We want you, and here’s what we could do together,” versus us coming in saying, “We already have the answers.” Obviously, we admire these companies. We’re paying premiums because they have built things that we want to take to an even bigger scale. We need to identify those individuals who can help lead that because we don’t believe we have all the answers.
Sustaining the momentum for change
Andy West: Let’s talk about momentum. How do you keep everyone focused on the business during an integration?
Lisa Blair Davis: For me, an acquisition is like a launch. You have one time to launch a new product, a new service, whatever that is. In the case of Abiomed, we were launching Abiomed inside of J&J. Yes, we have a deal model. Yes, it has a business plan that it wants to achieve. It has growth targets. But we need to hit those immediately. Because if your launch doesn’t go well, it’s much harder to get back on track versus continuing to build upon a launch and letting it grow.
We’re very intentional and very measured about what that growth needs to be and what the success factors need to be for month one, for quarter one. We might be tracking retention, sentiment inside of the organization, business performance, R&D milestones, clinical trial enrollments—but with each deal, the success factors could be a little bit different.
With Abiomed, it was important that we retained key talent—specifically, the R&D teams and the field sales force that were out directly with the customers every single day. How did we do that? We made sure to expand the role of Abiomed’s worldwide president, Andrew Greenfield, who had end-to-end accountability for that business globally. He was the one who was setting the tone for the rest of the organization on what it meant to be a part of J&J. We made sure to amplify what Andrew needed to do within the organization to retain that critical talent.
Andy West: How do you start to integrate acquired companies in ways that are not overwhelming or confusing?
Lisa Blair Davis: Very delicately. As new businesses come in, I think it’s the integration leader’s role to make sure to monitor people’s engagement with all parts of J&J because the organization can be overwhelming. We’re a matrixed organization. We have our own lingo, and sometimes you need translators. That was a role that I and [J&J integration leader] Michael Bodner played for Andrew Greenfield and his leadership team. We were intentional about where we would amplify and add resources—whether that be dollars, people, capabilities—to Abiomed so that the division could scale at the rate that it, together with J&J, wanted to.
We were constantly reassessing the situation. One thing I have learned in my experience with acquisitions is that sometimes the little things turn into really big things. And sometimes the things that we think may be big things for the company are going to be little things. You never quite know how things will materialize unless you’re actively in conversations and seeing how things are landing inside the organization.
One thing I have learned in my experience with acquisitions is that sometimes the little things turn into really big things. And sometimes the things that we think may be big things for the company are going to be little things.
Assessing culture and talent
Andy West: What advice would you give to others on managing high-performing talent and addressing culture?
Lisa Blair Davis: Talent and culture can be one and the same or two distinct topics. Let’s break them apart here. I look at culture as, what does it mean to exist inside of an organization? How do things get done? What really matters? What do leaders pay attention to? What do leaders roll their eyes at? It’s important to get the essence of what the culture is at an organization as you’re bringing in people from the target company. People often ask, “What’s the J&J culture?” And I say, “There are many separate cultures. But I know what holds us together, and that’s ‘Our Credo.’ That’s what we always start with.”
But there are different mechanisms by which business gets done. Take the Abiomed acquisition, for example. It’s operating in interventional cardiology. In that market, what does it mean to have customers who are interventional cardiologists? What are they expecting with the cadence of innovation? How do the customer engagements happen?
Once we understand the market the company is operating in, then we can more easily adapt J&J’s talent strategies to match it. I’m not going to bring into that space a bunch of people from J&J who have never worked in interventional cardiology or don’t know that market and have to get skilled up. In that case, what really mattered was keeping the professionals who had engagements with the interventional cardiologists so that we could maintain that growth.
One of the things that I heard about early on from people at Abiomed was the demand on the company’s field team. The team members were on call and sometimes covering large territories. So what could we do with our resources to help supplement and offset some of those work demands that they weren’t able to do on their own? Those are all things that you learn about the organization through a lot of inquiry—trying to understand what the marketplace is and the stressors on its talent.
You learn about the organization through a lot of inquiry—trying to understand what the marketplace is and the stressors on its talent.
The other thing about Abiomed we learned very early on was about its R&D and innovations. The company has an R&D center in Aachen, Germany, under Thorsten Siess, who invented the Impella heart pump, which is an unbelievable, lifesaving product. We wanted to make sure that the team around Thorsten felt engaged and that Thorsten felt like he had what he needed to keep innovating and being the inventor that he is.
Andy West: Relative to the diligence you did, did the Abiomed organization and culture match your expectations?
Lisa Blair Davis: It very much matched what we found through our diligence conversations. Did we have it 100 percent right? No, but we were 90 percent there. As I mentioned, J&J’s culture is made up of a lot of different cultures, depending on where you go among our businesses all around the globe. But there’s still a connectivity across all those sites, and that connectivity is thinking of patients first. There wasn’t a person that I met at Abiomed, the day after signing, who did not talk about patients first. That was so in line with J&J. I feel like we started from the same spot with Abiomed and J&J.
Andy West: That concept of finding common ground resonates. What also resonates is the idea that many different cultures can exist in an organization.
Lisa Blair Davis: I think one of the other factors—which can be an advantage, mostly, but sometimes a disadvantage—is that J&J is so large. We have so many employees who may have worked for us before, and then, as we do acquisitions, people rejoin us. They have their own J&J stories that they get to tell inside the organization. For example, I had worked with Abiomed’s US vice president of sales previously at J&J, and, when he returned, he was able to share some insights about the company and his own experiences. We need to amplify those voices so they can help others understand what it means to work here. That’s a lot more relatable than having me or the worldwide chair come in and tell the J&J story.
Doing the homework
Andy West: What advice would you give to other HR leaders looking to help drive their companies’ M&A strategies?
Lisa Blair Davis: I would say, make the business development person one of your closest allies. Know what you can talk to them about because things in the meeting are sometimes happening pretty fast. Identify those resources that can help you get smarter about what the company is trying to do. Sometimes people are afraid to ask questions in the big room, which is fine. But definitely find another reliable way to get the answers you need. This will help you get really good at framing issues from a people perspective, from a talent perspective, that are going to affect the deal. Do your homework—be ready.
Andy West: Any other lessons learned from the more recent deals?
Lisa Blair Davis: Don’t think that you have only one opportunity in retaining top talent. Just because we send one retention signal during due diligence doesn’t mean we can’t turn around six or 12 months later, when we know more about people’s skills and roles and what the company needs, and send another kind of signal. You don’t want to box yourself in too much, especially financially, by retaining people who, once they’re on the other side of the integration, decide it isn’t the right place for them but, because of the incentives set out initially, don’t want to leave.
Andy West: You have been very involved in M&A. How has that affected you as a leader?
Lisa Blair Davis: I feel very fortunate that I stumbled into this space very early in my career. I was in the right place at the right time, but it’s never too late to learn. One of the biggest growth opportunities for an HR professional is leading an integration or being on an integration team. Raise your hand. Make it known that you want to have these experiences.
One of the biggest growth opportunities for an HR professional is leading an integration or being on an integration team. Raise your hand. Make it known that you want to have these experiences.
Specific to HR leaders, I say you have to be very comfortable thinking about every single aspect of HR delivery to lead an integration. All those parts must come together to make the new organization work. It’s not just the business partnerships; it’s knowing how the compensation systems are going to work, how the benefits teams are going to work, how employment contracts are going to work outside of the United States. Everything must be woven together. It truly is an opportunity to deliver HR in a much more end-to-end way.
