How can you identify value creation opportunities in healthcare?

2 Target selection

The next step is to select the target companies that fit your investment criteria and value creation objectives. You need to evaluate the financial performance, operational efficiency, competitive position, and growth potential of each target company, as well as their alignment with your vision and values. You also need to consider the fit and synergies with your existing portfolio, as well as the availability and cost of financing. By doing a target selection, you can narrow down your options and focus on the most attractive and feasible opportunities.

3 Due diligence

The third step is to conduct a rigorous due diligence on the target company, to verify the information and assumptions you made during the target selection, and to uncover any hidden issues or opportunities. You need to examine the financial statements, contracts, legal documents, customer and supplier relationships, assets and liabilities, and human resources of the target company, as well as their market position, competitive advantages, and growth prospects. You also need to assess the risks and opportunities related to the regulatory environment, the industry dynamics, and the macroeconomic factors. By doing a due diligence, you can validate your investment thesis and prepare for the negotiation and closing.

4 Value creation plan

The fourth step is to develop a value creation plan for the target company, to outline the specific actions and initiatives that you will implement to enhance the performance and profitability of the business. You need to identify the key value drivers and levers that you can influence, such as revenue growth, margin improvement, cost reduction, operational excellence, innovation, digital transformation, and capital structure optimization. You also need to define the goals, milestones, timelines, resources, and metrics for each action and initiative, as well as the potential risks and mitigations. By developing a value creation plan, you can communicate your vision and strategy to the target company and the stakeholders, and set the foundation for the execution.

5 Execution and monitoring

The fifth step is to execute and monitor the value creation plan, to ensure that the actions and initiatives are implemented effectively and efficiently, and that the results are measured and evaluated. You need to establish a clear governance structure and a regular reporting system, to oversee the progress and performance of the target company, and to provide guidance and support when needed. You also need to track and analyze the key performance indicators (KPIs) and the financial and operational metrics, to assess the impact and value of each action and initiative, and to adjust the plan accordingly. By executing and monitoring the value creation plan, you can realize the potential and value of the target company, and achieve your investment objectives.

6 Exit strategy

The sixth and final step is to plan and execute the exit strategy, to realize the returns and value of your investment, and to exit the target company at the optimal time and price. You need to evaluate the different exit options, such as a trade sale, a secondary sale, an initial public offering (IPO), or a dividend recapitalization, and their respective advantages and disadvantages. You also need to prepare the target company for the exit, by enhancing its attractiveness and readiness, and by creating a compelling story and valuation. By planning and executing the exit strategy, you can maximize the value and return of your investment, and complete the value creation cycle.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?