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DIAGNOSTICS INDUSTRY STRATEGY:
When the senior management team of a Fortune 500 diagnostics company needed an advisor to challenge their thinking and develop an acquisition strategy,
they sought out Health Advances.
SITUATION
- Our client was a recognized leader in the field of clinical diagnostics with clear
strengths in particular market segments but major gaps in other product segments.
- Industry consolidation was underway and while our client had looked at many deals,
to date, they remained on the sidelines.
- Which acquisition targets make the most sense from a strategic and value creation perspective?
CRITICAL QUESTIONS TO ADDRESS
- What strategic options are available to our client to drive consistent growth in shareholder value over a five-year time frame?
- Should acquisition be a cornerstone of that strategy and, if so, should it be a major transforming acquisition driven by traditional
clinical labs, or a series of small, technology add-on businesses driven by the emergence of molecular diagnostics.
- Which acquisition targets make the most sense from a strategic and value creation perspective?
HEALTH ADVANCES APPROACH
- Engaged the senior executive team in a series of high-level discussions of the clinical diagnostic industry environment and the
strengths and weaknesses of the competitors in various business segments including consumables, equipment and distribution.
- Challenged the management team on the reasons why past deals had failed to be successful.
- Reviewed a series of acquisition targets, the rational for a potential deal including overlapping client segments and business
synergies and developed a series of scenarios describing the merits of a combined business with each target.
- Prepared a flexible valuation model and regression analysis to examine the potential increase in shareholder value for each
scenario for communication to the Board of Directors and to solicit their support for the price of a deal-focused strategy.
RESULTS
- Our client immediately embarked on the aggressive pursuit of a series of acquisitions including a few small technology-driven
acquisitions in cellular analysis and molecular diagnostics.
- After courting several targets, the company completed a major transforming acquisition in clinical diagnostics with substantial
customer-driven synergies that would cement its position as an industry leader.
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