Follow your instincts

Dec 01, 2015

From a $3.3.billion sale to voluntary bankruptcy, Declan Daly has had a challenging but thoroughly satisfying career. Now, his sights are set on global growth as CFO of Sláinte Healthcare.

When Declan Daly talks about his career in accountancy, he talks about “luck”. For someone with such an impressive CV and track record, it is quite ironic that his route into accountancy was almost accidental. Having completed the full term at Monkstown’s Christian Brothers College, Declan undertook a Management Science and Industrial Systems degree in Trinity College Dublin in an effort to “figure out where I wanted to go”. Although he enjoyed his time there, the clouds hadn’t parted at the time of his graduation. “I didn’t do the milk round but after Christmas, I heard that PricewaterhouseCoopers had a second round in May and I applied there,” he said. On being offered the position, Declan went on to receive a “typical broad training” at the firm and also spent two years at the firm’s London office working primarily in the area of financial services auditing.

At the age of 27,however,BDO’s Anthuan Xavier was on the lookout for an audit manager at the time – a coincidence that led to a happy pairing that lasted for seven years. “BDO made me more commercial. I was in charge of technical queries and I was working for Anthuan almost exclusively on really interesting things like a Christmas tree fund,” he said. “I also audited a lot of the firm’s public companies so I had a very unusual mix, but I loved it.”

The highs

After 14 years in the auditing business, one of Declan’s clients at BDO asked him to join the company. Inamed Corporation, a global healthcare company based in Santa Barbara, was in a poor state – it had been delisted from the NASDAQ stock exchange, its CEO had just been exited, and the company faced multiple business and accounting issues. The challenges were strangely alluring for Declan, but his decision was somewhat complicated by the fact that Anthuan was just about to nominate him for partnership at the firm. “There wasn’t a choice in my mind. It was a black and white answer for me, and I really wanted the challenge,” he said. “I wanted to move on and do something different, but it was the challenge that piqued me.”

Declan joined Inamed and set about restructuring the company with Ken Pearce, Inamed’s Vice President of International Operations. They quickly took control of the entire international division and based it in Ireland while also retrenching in other areas. “The hardest thing I had to do was visit Mexico quickly after I joined and close the operation down. It was heavily loss-making but the team had no idea how badly they were doing. The managing director was literally misleading them,” he said.

One of the benefits of working with an American firm, according to Declan, is their willingness to let you make decisions. Within his first 12 months at Inamed, Declan had made a number of key decisions that helped the company move from a loss-making position to one where the firm generated annual profits of $10 million. Declan’s performance brought him to the attention of Inamed’s new CFO, who was appointed in 2002, and he was subsequently transferred to the company’s global headquarters in Santa Barbara as Corporate Controller. While it seemed like a positive move, Declan was once again in at the deep end following the resignation of his immediate superior. “I found myself reporting to a CFO who resigned two months after I joined for personal reasons,” he said. “And I found myself in the middle of a storm as we had a number of historical Securities and Exchange Commission (SEC) accounting issues to deal with.”

Following a forensic review of the accounts, Declan opted to announce the accounting issues in one go. This ultimately resulted in a SEC audit and a steep plunge in the company’s share price. The firm eventually recovered, however, and went on to make “a lot of good strategic partnerships” that developed Inamed into a global aesthetics and healthcare business. Declan also moved up the ranks and eventually rose to the position of CFO while still in his 30s. The best was yet to come, however.

While Inamed was contemplating a merger with another firm of similar size, Allergen entered the fray with a bid that valued Inamed at $3.3 billion – raising Inamed’s value by more than $500 million. Declan, along with Inamed’s CEO and General Counsel, successfully negotiated the sale in April 2006, but not before Inamed’s second-largest shareholder – a large fund – threatened to scupper the deal. “They rang me threatening to pull the plug on the whole deal if we didn’t renegotiate the price up by a dollar or two. Their average buying price was $33 per share and they eventually sold at $82 per share,” he said. “We said: ‘Go ahead, if you think you’re going to get a better deal’. But they didn’t in the end because it was a tremendous deal. The fact that they wanted an extra dollar was a real eye-opener for me though.”

And the lows

Two months after the completion of the sale of Inamed Corp to Allergen, Declan and his family returned home to Dublin. His stay was short lived, however, as the former CEO of Inamed, Nicholas Teti, called on Declan to join him at Isolagen Inc. – a Pennsylvania-based firm. The company, which was developing LAVIV – a personalised cell-based therapy to combat ageing and skin defects – had an 80-strong division in the UK and Declan agreed to join the firm as CFO and head of the international division, provided he could operate from Ireland. Nicholas agreed but in a familiar twist of fate, Declan was quickly burdened with a host of issues. “I was over and back to the UK and just three months after I joined, it was obvious that the UK division was in terrible condition,” he said. “The division was making significant losses and hemorrhaging cash. I didn’t know a whole lot about manufacturing and sales, but it didn’t take a genius to see that it wasn’t being done well.”

Declan quickly took the decision to close the UK business and seek a major cash injection to allow Isolagen to focus on gaining approvals in the United States. “Fundamentally, it was the right decision because it was going to bring the whole group down. It simply had to be closed down.” The next step was to gain approval to bring LAVIV to market. The procedure had failed phase three trials three years previously, just months after the previous CEO resigned. Unfortunately for Declan, history was to repeat itself in a cruel case of déjà vu. “In January 2008, we were going through the trials and Nicholas suddenly resigned as CEO, but he was going to remain as Chairman,” he said. “Our share price plummeted. I had to meet our large shareholders and try to explain the situation – but to no avail. Part of the problem was, when LAVIV failed phase three trials previously, the CEO had resigned four months beforehand and the inference was that Nicholas knew something bad lay ahead.”

According to Declan, the board had “no choice” but to appoint him as CEO of Isolagen, and he had no choice but to “either leave or man up”. As it happened, the trials were a massive success and Declan, as CEO, quickly set about raising cash for a firm with no revenue – but he hit two critical snags. “August of 2008 was the worst possible time to raise money and coupled with that, we had convertible debt on our balance sheet that required 100 per cent concurrence of debt-holders before any deal could be done – and we literally couldn’t find 10 per cent of them.” The firm was going through a “slow death” before Declan ultimately opted for voluntary bankruptcy in June 2009. Under this arrangement, just 66 per cent concurrence was required for any debt deal and the firm was in and out of bankruptcy in 10 weeks.

The company was renamed Fibrocell Science Inc., a new board was appointed and David Pernock, who ran a $4 billion sales line at GlaxoSmithKline, joined as Chairman. It took some negotiation but by January 2010, David agreed to become CEO. Both he and Declan then worked to get LAVIV approved by the FDA (and become the first aesthetic cell therapy to gain approval), get listed on the NYSE stock market, raise $150 million and get biotech billionaire RJ Kirk’s Intrexon Corporation on board before Declan once again stepped down from his role and packed his bags for Ireland.

Looking ahead

After a year out, Declan was once again eager for a challenge and this time it came in the form of a comparatively small healthcare technology company based in Sandyford – Sláinte Healthcare. The firm aims to help hospitals become more efficient by digitising their entire paper trail and its cornerstone product, Vitro – an electronic medical records system – is in use in hospitals and healthcare institutions throughout the world. The firm has enjoyed considerable success since its foundation in 2006 and now employs over 130 people in Ireland, the Middle East, Australia and South America. It was also ranked fifth in Deloitte’s list of the 50 fastest growing companies in 2014.

Following a number of meetings with CEO, Andrew Murphy, Declan quickly saw an opportunity to build on this success and turn the small Irish company into a global player. “If we want to take this to the next stage, we’re going to have to raise money and that’s something we’re actively looking at,” he said. “We won’t do a deal unless we achieve terms we think are reasonable and, equally important, we are comfortable with the potential investor.”

With one eye on a possible IPO, Declan still has day-to-day responsibilities within the firm as CFO but this burden is eased thanks to the three Chartered Accountants on his team. This allows him to remain at the “bigger picture” level, devising strategy and driving the company’s performance. And while there are undoubtedly long days ahead, he’s ready for the challenge as always – thanks in no small part to his training. “If you are going to develop in business, having a grounding in finance is really important. You get that with Chartered Accountants but you also get more – you get the ability to think into other areas and disciplines,” he added. “The accountant of tomorrow is evolving gradually. It’s multidisciplinary and while you need your core skill set in financial-related topics, you need to have a good grasp of business and strategy. Even in practice, you must be able to talk rationally and with some nuance in terms of what’s involved in the running of a business – and that’s what you get from audit.”