Market Due Diligence by maconda for Strategic Investor from China
maconda News January 2014
Supporting service companies in strategic and operational matters as well as assisting investors in this multifaceted “industry” has long been among maconda’s core competencies. This applies to business-to-business services as well as to services for end customers. In healthcare, both converge: services are “sold” to physicians and clinics, ordered by patients, and paid for by health insurance providers. And in between are various intermediaries. The high complexity is almost tangible—a real challenge for an investor seeking to invest in a healthcare company, especially when that investor comes from abroad. In late 2013, maconda supported a “strategic” investor in an acquisition in the dental industry.
Permadental is one of the largest providers of dental prosthetics and dental restorations. The company supplies its customers—primarily independent dentists and dental clinics in Germany and the Netherlands—cost-effectively with crowns, bridges, implants, and telescopic crowns, among other products, and offers tailored service. Permadental has been sourcing many of these products for many years from Modern Dental, one of the world’s largest manufacturers of dental prosthetics and related products, headquartered in Hong Kong with offices in Europe, North America, Australia, and China. With the acquisition of Permadental, Modern Dental moves even closer to end customers.
The maconda team played a key role in supporting this step with a detailed Market Due Diligence. In 2008, maconda had already assisted the previous principal shareholder, a Private Equity firm from Amsterdam, in its investment in Permadental with a comprehensive Commercial Due Diligence, including the involvement of dentists as industry experts.
In the current transaction, we analyzed the relevant market for dental prosthetics, Permadental’s positioning in the competitive landscape of traditional and more industrially organized dental laboratories, as well as the general and socio-demographic market drivers. These include co-payment models of health insurance, demographic change, and advancing CAD/CAM technology.
Another component of our analysis was the regulatory framework of the highly complex German healthcare system, which we have examined several times in the context of other healthcare projects, albeit always from a slightly different perspective. To this end, we explained to our client and its Dutch banks the reimbursement practices for dental technical services as well as the contractual landscape involving health insurance providers, associations of statutory health insurance dentists, and contract dentists. Furthermore, we evaluated possible legislative changes and their impact on the business. In analyzing customers, our client also benefited from our comprehensive understanding of the target group of (dental) physicians and their ordering behavior.
Of course, we are also available to you as a competent and trusted partner. In healthcare as well as in other industries, for Commercial Due Diligence (also on the sell side), value creation projects, business development, international expansion, and strategic and operational restructuring.
Contact us anytime if you need expertise in this area. We are happy to assist you!