Case spotlight: Keep or Sell the Healthcare Family Business: The Case of Promamec in Morocco

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This case was featured in Connect, issue 52, June 2021.

Who – the protagonist

Naoufal LahlouPromamec General Manager/CEO.

What?

Promamec is a healthcare company specialising in the production and distribution of medical devices, equipment, and consumables for the public and private sectors.

Its mission is to provide competitive and innovative medical solutions for health professionals to improve the quality of care for their patients.

Medical equipment and monitors

Why?

The right to access healthcare becoming part of the Moroccan Constitution, and a new law allowing non-healthcare professionals to enter the market, meant competition had intensified and financial resources had become more limited for Promamec.

With his father Abdelilah passing the business onto him, Naoufal had to decide whether to keep Promamec in the family or sell it to AfricEquity, a private equity firm interested in buying them.

When?

The 2011 Arab Spring events led to changes to the Moroccan Constitution, which impacted Promamec and the healthcare industry. By October 2018, Naoufal had to decide his business’ future.

Where?

Located in north Africa, Morocco has long been an international hub between Europe and Africa with its access to both the Atlantic Ocean and the Mediterranean Sea.

Recent political stability has attracted foreign investment in various sectors.

Key quote

“I really thought about it (selling part of the company) in a much more rational way (than my father), in terms of opportunities it could present, as opposed to losing part of the capital, and your baby that you raised for more than 30 years, almost 40 years.”
Naoufal Lahlou, General Manager/CEO, Promamec

What next?

Naoufal was uncertain as to how he should proceed so that Promamec would continue to grow, while maintaining its competitive advantages(s) and corporate culture. Should he keep control and stay privately held, or sell some equity to AfricEquity? If so, what percentage of the family business should he sell? Were they any other options available to him?

AUTHOR PERSPECTIVE 

Inspiration behind the case

Mounir said: “We were inspired to write about Promamec through the combination of many elements that were so unexpected in Morocco: a family-owned healthcare business started by a young and inexperienced entrepreneur who succeeded beyond any reasonable expectations in a country located in a turbulent part of the world. Also, the ability of the company to sustain consistent growth over many years was another reason to try to deep dive and decipher the underlying factors that enabled this.”

Clear and strong dilemma

Bertrand commented: “Business is often black or white, debit or credit and grey areas are difficult to handle for most students and managers. Most solutions are associated with more resources, not so much the orchestration of these resources and the strategic implementation of the strategy. Dilemmas cannot be resolved easily. A rich case should have a clear and strong dilemma where several perspectives can be taken into account to discover the richness of business and management.”

3 cubes with question marks on them

Power of field research

Mounir added: “Fast-growing companies like Promamec tend to stay focused on their mission and too few published sources cases tell their story. However, when discovered, these stories are applicable to other industries and countries; they are real gems.”

If we had our chance to write the case again

Bertrand concluded: “Maybe we would interview the father more and write an epilogue: five years after the decision, what happened, what went right or wrong.”

THE CASE 

The case

Who – the protagonist

Naoufal LahlouPromamec General Manager/CEO.

What?

Promamec is a healthcare company specialising in the production and distribution of medical devices, equipment, and consumables for the public and private sectors.

Its mission is to provide competitive and innovative medical solutions for health professionals to improve the quality of care for their patients.

Medical equipment and monitors

Why?

The right to access healthcare becoming part of the Moroccan Constitution, and a new law allowing non-healthcare professionals to enter the market, meant competition had intensified and financial resources had become more limited for Promamec.

With his father Abdelilah passing the business onto him, Naoufal had to decide whether to keep Promamec in the family or sell it to AfricEquity, a private equity firm interested in buying them.

When?

The 2011 Arab Spring events led to changes to the Moroccan Constitution, which impacted Promamec and the healthcare industry. By October 2018, Naoufal had to decide his business’ future.

Where?

Located in north Africa, Morocco has long been an international hub between Europe and Africa with its access to both the Atlantic Ocean and the Mediterranean Sea.

Recent political stability has attracted foreign investment in various sectors.

Key quote

“I really thought about it (selling part of the company) in a much more rational way (than my father), in terms of opportunities it could present, as opposed to losing part of the capital, and your baby that you raised for more than 30 years, almost 40 years.”
Naoufal Lahlou, General Manager/CEO, Promamec

What next?

Naoufal was uncertain as to how he should proceed so that Promamec would continue to grow, while maintaining its competitive advantages(s) and corporate culture. Should he keep control and stay privately held, or sell some equity to AfricEquity? If so, what percentage of the family business should he sell? Were they any other options available to him?

AUTHOR PERSPECTIVE 

Author perspective

Inspiration behind the case

Mounir said: “We were inspired to write about Promamec through the combination of many elements that were so unexpected in Morocco: a family-owned healthcare business started by a young and inexperienced entrepreneur who succeeded beyond any reasonable expectations in a country located in a turbulent part of the world. Also, the ability of the company to sustain consistent growth over many years was another reason to try to deep dive and decipher the underlying factors that enabled this.”

Clear and strong dilemma

Bertrand commented: “Business is often black or white, debit or credit and grey areas are difficult to handle for most students and managers. Most solutions are associated with more resources, not so much the orchestration of these resources and the strategic implementation of the strategy. Dilemmas cannot be resolved easily. A rich case should have a clear and strong dilemma where several perspectives can be taken into account to discover the richness of business and management.”

3 cubes with question marks on them

Power of field research

Mounir added: “Fast-growing companies like Promamec tend to stay focused on their mission and too few published sources cases tell their story. However, when discovered, these stories are applicable to other industries and countries; they are real gems.”

If we had our chance to write the case again

Bertrand concluded: “Maybe we would interview the father more and write an epilogue: five years after the decision, what happened, what went right or wrong.”

THE CASE 

The protagonist

Naoufal Lahlou
General Manager/CEO
Read the case

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This case was published by Thunderbird School of Global Management.

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