Sell-Side Advisory and Valuation

A leading healthcare company was evaluating the sale of one of its units in the wound care space. Leaders wanted to understand the value of the business to drive internal alignment on value expectations for it. Further, the client wanted advice on whether to sell the business or continue to invest in it.

Our team started by understanding the unit’s strategy, product portfolio, key customers, and financial performance. We performed a detailed analysis of sales and profitability at a product level, the risks and commercial opportunities associated with the development assets, the current and future competitive landscape, and the current cash flow and investments required for the business. We then developed a robust forecast and performed a valuation using a discounted cash flow analysis. We performed sensitivities on key assumptions to understand the key value drivers of the business. We also benchmarked recent deals in the sector to understand current market valuations, deal structures, and implications for the sale of the business.

Our analysis helped the client understand the business’ value and the key risks and opportunities associated with it. We helped articulate its current and potential future valuation, based on achieving certain milestones. Further, we highlighted the existing deal environment and implications for selling the business. Our recommendation for a value-enhancing strategy was to retain the business and focus on executing the business plan for it, then revisit the sale in eighteen months. That approach would enable the client to meet certain value inflection points for the business and enable management to derive significantly greater value from the sale at that time.