Deal summary:

Target: Permadental

Industry: Healthcare / dental prosthodontic products and prostheses

Investor: Modern Dental Europe

Task: Market Due Diligence

Permanent Dental Prostheses from Asia and Sophisticated German Healthcare – Market Due Diligence by maconda for a Strategic Investor from China

maconda news January 2014

maconda has long been providing support to service companies in strategic and operational issues as well as providing assistance to investors in this diverse "industry". Our core focus areas include business-related services as well as services for end customers. Both of these are essential to understanding the healthcare system: Services are "sold" to doctors and hospitals, are ordered by patients and paid for by health insurance companies. Furthermore, different intermediaries stand between all of these various actors. The sector's high complexity is practically tangible and presents a real challenge to an investor looking to invest in a company from the healthcare field – particularly if this investor is from a foreign country. maconda supported a "strategic" investor on a purchase in the dental sector at the end of 2013.

maconda assists China-based Modern Dental Europe in its acquisition of the Dutch company Permadental

Permadental is one of the largest suppliers of dental prosthodontic products or prostheses. The company provides its customers, which mainly consist of practicing dentists and dental clinics in Germany and the Netherlands, favorably-priced crowns, bridges and implants as well as telescopic crowns and offers tailor-made services in this area. Permadental has been purchasing many of these products from Modern Dental for years, one of the world's largest producers of dental prostheses and related products. Modern Dental's headquarters are located in Hong Kong and the company also has offices in Europe, North America, Australia and China. With the acquisition of Permadental, Modern Dental has moved closer to end customers.

The maconda team played a key role in this step by providing a comprehensive market due diligence. maconda had already supported Permadental's previous majority shareholder, a private equity house from Amsterdam, on its entry into the company with a comprehensive commercial due diligence, which incorporated dentists as industry experts.

For the current transaction, we analyzed the relevant market for dental prostheses, Permadental's positioning in the competitive landscape for traditional and more industrially-organized dental laboratories as well as general and sociodemographic market drivers. This included the co-payment models used by the health insurance companies, demographic changes and the up-and-coming CAD/CAM technology.

A further area of our analysis focused on the regulatory framework of the highly complex German healthcare system, which we have thoroughly examined over the course of various other healthcare projects (even if these focused on slightly different areas). We also carefully described the reimbursement practices for dental services and the contractual landscape at health insurance companies, associations of statutory health insurance dentists and panel dentists for our client and its Dutch banks. At the same time, we evaluated possible legislative changes and their effects on the business. Finally, our client benefited from our comprehensive understanding of the target group of dentists and their purchasing behavior from our customer analysis.

It goes without saying that we would be more than happy to assist you as an experienced and reliable partner for your commercial due diligence needs (also for vendors), market and competition analyses as well as for your value enhancement, segment development and foreign expansion projects or in strategic and operative restructurings – in healthcare or in other industries.

Please get in touch should you require our expertise. We look forward to hearing from you!

About maconda

We support our clients in increasing sales, profit and company value as well as commercial transaction services. These include comprehensive target screenings, systematic preparations for company sales (exit readiness), commercial due diligence assessments (also for sellers) and post-merger integrations. Our main industries of expertise: consumer goods, foods, retail, services (health, leisure, media, etc.), business process outsourcing (customer service, temporary work, facility management, etc.), textiles and select technical industrial goods. Our multinational team of consultants is optimally positioned, completely covering the key regions of Western Europe, the CCE countries and BRIC countries – in most cases with native speakers.

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