Medtec UK

Cliff Murphy
Partner ~ ConAlliance UK
Interim CEO at NIGHTINGALE EOS

Exit strategies and

maximising value

Presentation Overview
Introduction & changing nature of healthcare
What is value?
A company lifecycle
A buyers perspective ~ Trade sale
Other exit strategies ~ IPO & Private Exit
Top tips for value

FOUNDED

2011

HEADQUARTERS

Munich; Highlight Towers

OFFICES

London, Hong Kong, (New York)

CONALLIANCE
TEAM

Currently 15 people:
Experienced senior professionals from management consulting
firms, investment banks and healthcare companies with indepth insight into the life sciences markets, strong research
and clinical foundations.

INDUSTRY
SPECIALIZATION

Expertise is concentrated on a single sector:

the global healthcare industry

EXPERIENCE

Proven track record of > 100 relevant M&A projects

CLIENTS

Our clients are medium-to large-sized family-owned enterprises,

divisions of multinational groups, leading private equity funds and
family offices.

What we do
Work on the Buyside & Sell
side
Work with small companies
on the commercialisation of
technology
Strategically place
technology
Prepare companies for sale

Divestures

Medical technology

40%

Analysis and research

Restructuring and
fincance

5%
20%

45%

Hospital care

Acquisitions

Life Sciences

30%

Sector Split

Expertise

25%
35%

Contextthe changing world

Lower Tax revenues
1) Less people contributing
2) Later stage people spend less money
Less VAT
Less churn of cash
Less drive of consumer goods
Impact on healthcare funding?
1) More demand ~ aging pop.
2) Greater expectations
3) Growing Pop.
4) Etc.
Impact of National austerity programs?

Increased Demand for Medical Treatment:

In 2012 Medical Technology was the field with
the highest volume of patent applications in
Europe.

However, healthcare spending in Europe is under

pressure. Austerity measures have impacted on
expenditure for medical technologies and containments
effects are clearly visible since 2006.
Expenditure Trend: Medical Technology vs. HC

Amount of investment compared to other sectors?

Presentation Overview
Introduction & changing nature of healthcare
What is value?
A company lifecycle
A buyers perspective ~ Trade sale
Other exit strategies ~ IPO & Private Exit
Top tips for value

Beauty is in the eye of the beholder!

Beauty is in the eye of the beholder!

Beauty is in the eye of the beholder!

Global deal: product and
reimbursement must translate
globally as this defines
accessible market
Regional deal: Right market +
right time

Desire is based on perspective!

Space grab deal: non

healthcare player wants
market access

Macro impact of healthcare system on medical technology strategybut

also impact concept of value!

Proposition: methodology /
technology

Value Proposition
Med tech &
consumables

Where to playTreatment path

Prevention,
health &
wellness

Diagnosis

Intervention /
therapy

Treatment/follow
up

Traditional Medtech territory

Data & Health

Informatics
Planning &
Management of
care
Care Delivery

Example: Baxter Kidney Dialysis and Cancer treatments

Presentation Overview
Introduction & changing nature of healthcare
What is value?
A company lifecycle
A buyers perspective ~ Trade Sale
Other exit strategies ~ IPO & Private Exit
Top tips for value

Life cycle overview

Company Profits
Corporate Loans

Company Revenues

Risk

PE
Friends &
family ~ Angel

time
VC

IPO

There are only 2 ways

of exiting a business
Sale
Liquidation
Everything is funding

Value Inflection points?

Private/growth equity, IPO, trade sale
Strategic investment
Venture Capital

Value Creation

Grants, angels etc.

Reimbursement is
crucial to value
creation
Concept

Prototype

Clinical
Reg
trials approval

Early
commercial

Full
commercial

Presentation Overview
Introduction & changing nature of healthcare
What is value?
A company lifecycle
A buyers perspective ~ Trade Sale
Other exit strategies ~ IPO & Private Exit
Top tips for value

Exit options ~ Trade Sale

Trade players buy for:

Benefits:

Technology play
Revenue and Synergy play

Earn out and exit model ~ rarely a

fund raising exercise

Strategic segment play

Relatively clean
Less demanding than an IPO in terms
of cost or resource

Down side:
You are out of the business!
Little control over the longer term
Corporate strategy: The quest for parenting advantage

Forensically review you business

to understand where the gaps
are!
A

Alignment
Integration
Clean books
Ownership
structure

Small Co.

prescriptive

IP
Future
Proofing
FTO
Competitor

Synergy

What do companies want?

Technology

Exit options ~ Trade Sale value

Management
Structure
Contingency
planning
Customer
base

Presentation Overview
Introduction & changing nature of healthcare
What is value?
A company lifecycle
A buyers perspective ~ Trade sale
Other exit strategies ~ IPO & Private Exit
Top tips for value

Exit options ~ IPO

Company Profits

Corporate Loans
Company Revenues

Risk

PE
Friends &
family ~
Angel

time
VC

Why IPO?
Greater access to funds
Access to alternative funds
Enhances prestige
Higher valuations than private companies
Potential exit of investors

IPO

IPO is not an end game!

Why NOT IPO?

Costly and time consuming ~ approx. 300k +
Limits management freedom
Potential loss of control
Shareholder expectations
Value post IPO can go down!
Small businesses can suffer from significant
dilution

Exit options ~ Private Equity

Company Profits

Corporate Loans
Company Revenues

Risk

PE
Friends &
family ~
Angel

time
VC

IPO

How does PE work?

Provide access to finance for expansion
Maximise technology and financing
Look to leverage and achieve economies of
scale
Aim to sell within a 5-7 years time horizon
Focused towards growth and look for 3x return
Want a well defined business plan
Potential negatives?
Look to sell within a 5-7 years time horizon
Focused towards growth ~ Need a strong
growth story to be of interest
Challenge yourself if you have the desire for
the journey!

Presentation Overview
Introduction & changing nature of healthcare
What is value?
A company lifecycle
A buyers perspective ~ Trade sale
Other exit strategies ~ IPO & Private Exit
Top tips for value

Top tips to maximise value!

Always aim to build a business that will be successful and might happen to be acquired rather
than building a business for sale!
Have a long term planactivities that increase value for your business mostly increase value for
an acquisition, but not always!
Strong management team?
Plant and infrastructure ~ a good idea?

Define beauty and understand value!

Right sectors, price point, geographical expansion potential, Technology, IP etc. ~ Make yourself pretty!

Ensure that every aspect of the business has a plan.

IP, Health Economics, reimbursement, manufacturing, Business model scalability etc.

Understand what you are getting into and find an Buy the ticket take the ride