Case Statement:
Client is a Medtech player company in the UK with diagnostic lab capabilities. They wanted to pursue acquisitions in the diagnostics space and was looking for potential players for the same. Help them in carving out the filtering framework to prioritize the potential M&A targets.
I : The client is a Medtech company in the UK with diagnostic lab capabilities. They want to pursue acquisitions in the diagnostics space and are looking for potential targets. Help us develop a filtering framework to prioritize M&A targets.
C : To start, could you clarify the main reasons for these acquisitions? Is it for product expansion, talent acquisition, market access, geographic expansion, or credibility building? Also, is there any specific information about the no. and size of competitors we have in the market and the customer base that exists for the industry in UK?
I : We want to evaluate all these criteria, so it would be helpful if you could help us identify what to assess for each parameter. As for competition, there are 2 other major players having a cumulative market cap of 45%. The customer base is majorly spread across the retail segment and captures a market size of £10bn across three tiers of customers (i.e. rich, middle and poor)
C : Sure, for product, we should focus on the types of tests the labs offer. For talent, we should examine the scientific expertise. To assess credibility, we should look for major accreditations. Access should involve analyzing the customer base. Lastly, for geographic expansion, we should evaluate the lab's presence in the home market. Is this comprehensive, or did I miss anything?
I : This is quite exhaustive. Also, please keep in mind that we have 60 companies to evaluate. Do you plan to assess all of them together, or do you have another approach in mind?
C : I suggest a three-phased approach. We'll start by filtering companies based on fundamental criteria like company type, value creation, lab capabilities, business focus, and product offerings. After this, we'll create an intermediate list for further evaluation, considering revenue, diagnostic capabilities, accreditation, and talent. Finally, we'll shortlist a few companies for a final assessment based on assets, talent, physical footprint, and customer profiles.
I : This is a detailed approach.
C : Also, are there any specific exclusion criteria that you think is a no venture zone for us in the diagnostic industry for us.
I : Not exactly, but we would not like to enter majorly into toxicology which primarily has to do with drugs; IVF testing; and genetics and genomics.
C : Okay, so we’ll add this exclusion criteria while narrowing down on the intermediate list.
I : Great. Can you now present a method to analyze and select the target company for acquisition after all these assessments?
C : Certainly. Before I create the assessment matrix, could you clarify the most important criteria for choosing the final picks?
I : As a prominent diagnostic brand, we are primarily focusing on expanding our product capabilities and increasing our customer base.
Background Information:
Company – Medtech company specializing in in-vitro diagnostic capabilities
Competitor – 2 major players having a cumulative market cap of 45%
Consumer –Majorly spread across the retail segment and captures a market size of £10bn across three tiers of customers
Case recommendations:
Prioritize Complementary Capabilities: Focus on acquiring companies with diagnostic capabilities that complement client’s existing portfolio, enabling product diversification.
Expand Customer Base: Target companies with a diverse and extensive customer base, especially in untapped geographic regions, to grow your market reach and profitability
