Healthcare Investment and Entrepreneurship
Following a successful graduation from School, you have landed a job as a Senior Associateat Healthcare Growth Drivers IV, L.P., a $100 million dollar private equity firm investing in healthcare IT and healthcare services. For the last six months, you have been courting a company, TransparentTransactions (TT) . TT, further details of which are provided below, is a new entrant in the fast-growing consumer transparency space: the products and services that allow consumers to make more informed choices around the care they receive. TT offers two products:
- PlanLiberation-Allows health plan members and covered employees to set appointments, search for providers, compare treatment costs across sites of care, and engage in conversations with communities of like-minded patients
- VolumeBlast-Online platform for providers to access market insights on de-identified patient behavior (e.g. treatment searches, appointment setting at competitor institutions). This data allows for more targeted consumer marketing campaigns.
As you approach the investment decision-making process, you will need to produce an investment memo (4-6 pages plus exhibits) for the investment committee at your fund.
The memo will consist of the following sections:
- Executive Summary-Brief description of the investment rationale and the proposed deal (price/terms). In structuring the deal, you should apply the lessons you have learned in class and from Brad Feld's book on term sheets.
- Pre and Post-Transaction Cap Tables-Fully diluted ownership by shareholder before and after the investment by Healthcare Growth Partners.
- Valuation and Returns Analysis-Valuation and basis for arriving at valuation. In valuing the company, you should draw upon the lessons you've learned in class on how to value a HCIT company. You should also feature a return profile for your fund at a rangeexit values.
- Market Overview-Total addressable Market, Served Available Market and Share of the Market (TAM, SAM, and SOM) for TT, as well as key market drivers.
- Competitive Landscape-Description of the other players in the market and the sources of competitive advantage.
- Exit Dynamics-List of prospective buyers by category and their associated rationale for acquiring the company.
- Investment Strengths & Risks-List of the positives and negatives of the investment.
- Diligence Approach-Description of the proposed diligence plan and corresponding time frame.
In assembling this memo, you will draw upon some of the supplemental information provided below, as well as conduct your own primary and secondary research on the market.
Attachment:- Supplemental Information.rar