An important Latin American investment fund required to deepen its understanding of potential target in the Colombian health services market and to validate its investment thesis. Based on a robust market analysis and a detailed due diligence process, Matrix Consulting recommended the acquisition of the target, and developed a 5-year business plan to maximize its value.
Context
A recognized private equity fund sought to enter the healthcare services sector in Colombia and consolidate investment in this market after its success in Brazil. A network of high-complexity healthcare centers had been identified as a potential acquisition target and platform to consolidate a comprehensive healthcare network in the country.
The fund asked Matrix Consulting to perform operational due diligence of the target, the validation of the investment thesis potential, and the creation of a 5-year strategic business plan to maximize the asset’s value.
Opportunities detected
When analyzing the potential target, some issues were identified in terms of internal management. These included having a poorly diversified client portfolio, the existence of a significant financial mismatch, and poor receivables turnover ratio.
Regarding the operation, there were inefficiencies in the use of installed capacity and the execution of healthcare processes that caused bottlenecks in Hospitalization and the Emergency Room.
Additionally, the target had precarious corporate governance as it managed limited and poorly standardized information.
Proposed actions
Through an exhaustive market study, the recognition of global and local industry trends, and the analysis of the target’s competitive environment, Matrix Consulting was able to identify attractive market capture opportunities in the fastest growing and highest potential medical specialties.
Subsequently, a holistic diagnosis of the business model in key dimensions (Strategy, Commercial, Services, Operational and Financial Processes, IT and Organizational Model) was built and used to identify and prioritize opportunities, for the purpose of strengthening the core business and growing in adjacencies.
Finally, Matrix developed a 5-year business plan composed of actionable and detailed initiatives, with a specific business case, responsible individuals, set tasks, and required CAPEX. The main risks associated were also identified, a clear mitigation plan was defined for risk management, and a roadmap was built.
Impact
As a conclusion of the operational due diligence performed, the acquisition of the target was recommended given its attractiveness and strategic value for the investment thesis.
A 5-year business plan was delivered, which projected an annual growth of 15%, aiming to increase revenue by 3.3x and EBITDA by 3.8x.
Likewise, based on the risks and key enablers identified, an implementation and first 100-day plan were detailed.
