Acquisition target screening for a US-Based healthcare company.

About Client:

A US-Based healthcare company into B2B segment, wanted to acquire a company for better market reach, market expansion, and cost synergies.Management team (CFO and the Head of strategy) were very clear in terms of regions, type of businesses, and the sizes of businesses they were interested in.

Business Problem:

Management team didn’t want to pay top-dollar to the investment banks for this acquisition target screening, and also,they weren’t sure of the right market valuation; and didn’t want to burn cash beforehand. Hence, were looking for an investment banking services firm for doing the screening of acquisition targets. ValueAdd, having a natural investment bankDNA, was their first choice among the three other large competitors. After a deliberation of 2-3 weeks, ValueAdd was awarded the contract of target screening.

ValueAdd Solution:

ValueAdd deputed two associates and one analyst along with a Delivery Manager, with a vast investment banking experience, especially with M&A advisory function. The team had in-depth scoping calls with the client to deep-dive into the requirements. There were six sub-sectors that were allocated across the team members.

Creation of initial list:

  • The team leveraged the paid subscriptions including Bloomberg, Crunchbase, and others to screen various targets.
  • Lack of information was the key challenge as the entire universe was private. Yet the team did smart searches using various key words to find suitable targets.
  • The initial list of 100 companies was prepared along with relevant details including, incorporation year, HQ, revenue, number of employees, key clients, locations covered, products and services, any patents, founders and management team, any recent management exists, current and past investors, recent fund raises, any acquisitions/divestitures, etc..

Company profiles of select top-25 targets:

  • The list was scrutinized by the client. And, with one more iteration, the final list of top-25 potential target companies was prepared.
  • For management decision-making, detailed company profiles of these companies were prepared. This profile pack helped client review each target in detail.

Fair business valuation for each target:

  • ValueAdd delivered the fair relative valuation (trading comps and deal comps) of these six sub-sectors. This helped client arrive at the reasonable valuation range. It also provided fair valuation for each of these 25 targets based on EV/Revenue or/and EV/EBITDA or PE multiple.

Contact information of the CXO of each target company:

  • Although not part of the scope of work, ValueAdd delivered the contact information of all the key decision-makers or CXOs of these target companies. The contact information included name, location, designation, direct phone, board numbers, mobile, email, LinkedIn, Bio, Website URL, etc.
  • This helped client to reach out to the CXOs of the shortlisted targets for due diligence.

Benefits Delivered:

  • The client acquired one of those 25 target companies within 6 months from this exercise!
  • Huge dollar-savings of minimum ~USD100,000, by not hiring an investment bank at this stage.
  • Minimal involvement of management team, as the ValueAdd experts managed the process end-to-end.
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