Commercial & Tech Due Diligence: Increased value and informed investment decisions in the healthcare sector

Customer's situation

A private equity investment fund specializing in mid-cap deals had exclusivity for the acquisition of one of the largest German and Swiss training institutes in the health and alternative practitioner sector. The company had to be intensively examined within two months (commercial and technology due diligence). The central challenges:

Commercial assessment: Assessment of the expansion potential in the digital area and the growth potential.

EBIT margin analysis: Identification of cost saving opportunities and margin development for the next five years.

Financial model: Creation of an LBO model to forecast profit, cash flow and balance sheet development, including interest and repayment rates.

Data room challenges: Unstructured data made complete and informed analysis difficult.

The aim was to carry out a comprehensive assessment of the company and to create a reliable basis for investment decisions and bank financing.

Novemcore's work

Novemcore carried out a comprehensive commercial and technology due diligence to analyze all relevant aspects in detail. The focal points:

Commercial Due Diligence: Baseline Assessment: Analysis of the offer portfolio (margin analysis, thematic coverage).

Assessment of digitalization in the course offerings.

Customer analysis (churn, retention, cross-selling potential).

Efficiency analysis of local educational institutions and the operational model.

Market and competition analysis in the DACH region and internationally (especially for the online education market).

Value Creation Levers: Identification of digitalization measures and IT adjustments.

Determination of sales and margin increase potential.

Risk analysis: Assessment of risks and opportunities (including regulatory risks, buy & build potential).

Technology Due Diligence: Detailed analysis of the IT landscape.

Recommendations for necessary adjustments and investments for digitalization.

LBO financial model: Creation of a comprehensive Excel financial model with scenario analyzes (growth, margins, liabilities).

Integration of all value creation levers into financial forecasts.

Market modeling: Development of a granular market model (Total Addressable Market [TAM], Servicable Addressable Market [SAM], Serviceable Obtainable Market [SOM]).

Segmentation by geography and customer groups with 10-year growth forecast.

Interviews and studies: Conducting >15 industry expert interviews and >10 internal discussions with employees of the target company.

Evaluation of >20 industry studies for market and trend analysis.

Result for the customer

The results of the collaboration were comprehensive and allowed the customer to make a balanced investment decision:

Detailed due diligence reports: 160-page report with well-founded analyzes and recommendations for action.

Executive summary for co-investors and bank discussions.

Efficient bank communication: Support in >10 financing discussions with banks in order to present opportunities and risks from a neutral perspective.

Financial model and scenario analysis: Excel model for company valuation and identification of value creation levers.

Technology report: 40-page report on the IT landscape and necessary investments.

Strategic planning: 5-year roadmap for the implementation of the identified measures.

Granular market model for evaluating current and future market potential.

Conclusion

Novemcore supported the private equity fund with a structured and detailed due diligence that covered all relevant dimensions. Through well-founded analyses, precise financial models and strategic recommendations, a secure basis for investment decisions was created. This case study shows Novemcore's expertise in commercial due diligence, IT budget planning and market modeling.

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