The Healthcare Intelligence Hub E-Newsletter
Data / Empowering High Performance
Make the Most of Market Opportunity with Merger & Acquisition Research
Jennifer Dennard, E-Media Marketing SpecialistJuly 20, 2010
The business world has been abuzz recently with a number of mergers, acquisitions and joint ventures between big name healthcare players, both on the vendor and provider sides. On the flip side, market research firms and consultants to the healthcare industry have been busy providing their services to these businesses to ensure that new ventures are put together with the best chances of success.
The Vendors
As has been widely reported, healthcare IT powerhouses Allscripts and Eclipsys will merge in a deal valued at more than $1 billion. Investor meetings in mid-August at the respective companies will help facilitate the merger, expected to close in four to six months.
Wireless network provider Nokia Siemens Networks will acquire by year's end certain wireless network infrastructure assets of Motorola Inc. for $1.2 billion, making it the #3 wireless infrastructure vendor in the United States, and reinforcing its #2 position globally.
Wilbur L. Ross Jr., CEO of WL Ross & Co. LLC, and Edwin "Mac" Crawford, a former chairman of CVS Caremark Corp., recently announced their intent to join forces to invest and restructure healthcare companies. "We are prepared to invest more than $1 billion to support Mac and his team as we jointly build a major position in healthcare," said Ross in a recent press release announcing the Crawford-Ross joint venture.
Such deals are not entered into lightly. Independent market opportunity research, commonly referred to as M&A Research, plays a large - if often overlooked - part in these types of transactions. Comprehensive due diligence into potential merger or acquisition targets can assist management with valuation of assets associated with marketing, commercial viability and insight into the customer base.
"Entities involved in these types of deals hire firms like ours to better understand how loyal the acquisition target's customers are, among other things," says Cynthia Porter, President of Porter Research. "Customer satisfaction studies provide huge insight into underlying issues prior to closing the deal."
The Walden Group, a banking firm specializing in small to medium-sized merger, acquisition and strategic transactions in the healthcare industry, often directs clients to independent research providers for additional perspective and analysis. "Often, but not always, a client needs assistance to analyze strategic options, including remaining independent, selling the company, raising additional capital, engaging in a strategic transaction, investing more in sales resources, or seeking to obtain certain milestones on the horizon, among other options," says Richard S. Cohen, president of The Walden Group.
"When representing buyers, we are often called upon to review or help formulate strategic plans, including whether to acquire another business, grow organically with additional investments and to conduct other activities similar to those above," he adds. "In conducting an acquisition search, we review the strengths of our client and research clinical areas and exact acquisition targets that would provide for a synergy, typically availing of our client's infrastructure, but could also entail entry into a new market."
The Providers
Vendors to the healthcare arena aren't the only ones who have seen an increase in M&A activity of late. Providers have felt their fair share as well, as evidenced in a recent USA Today article, " Mergers of For-Profit, Non-Profit Hospitals: Who Does it Help?" which profiles a small portion of the large jump in hospital merger and acquisition activity. At least 50 hospitals have been involved in such deals since the beginning of 2010, and there doesn't seem to be any slow down in sight.
Cohen believes mergers and acquisitions will continue to escalate, as healthcare reform ushers in new incentives for providers and in turn forces the growth of the healthcare IT industry. "Providers are under stress and will need to gain economies of scale, centralize and combine certain functions, and otherwise implement more efficiencies to survive in an environment of shrinking federal and state budgets, expanded healthcare coverage and new technologies," he says.
Research Methods in the Healthcare Market
The need for M&A research on both sides of the healthcare coin seems to be greater than ever. Candice Seiger, Associate Research Director at Luminosity Marketing, has worked with public health groups, non-for-profits and for-profits in such areas of healthcare as insurance, education, bio-medical and pharmaceutical. She stresses that "[a]lthough each sector in healthcare requires unique research activities prior to completing a M&A, this research mainly falls into two categories: Marketing/marketing research; and competitive intelligence. Full service should be given to each category in order to ensure that due diligence is completed before the M&As take place."
Whether a healthcare vendor or provider is looking to conduct marketing and customer base due diligence, position its company for sale or raise additional capital, or identify potential acquisition targets, the multifaceted offerings of a comprehensive M&A Research program will limit risk and pave the way for a smooth transaction.
Click here for more information on Porter Research's Mergers & Acquisition Research services, or contact Cynthia Porter 678-282-1033, cporter@porterresearch.com.
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