Maximising value today and at exit with robust digital strategies

Published in Global Banking & Finance Review, April 2021

Our Director, Chris Gauld, shares how healthcare businesses can maximise their value in the current landscape.

The landscape

In 2020, according to Pitchbook, the healthcare sector was the third most active in US deals and fourth in Europe. It now accounts for 14% of deal value.

 

In the post-COVID-19 landscape, this trend is only set to continue. With an ageing population and the effects of the coronavirus pandemic still reverberating, this is no surprise. From a private equity perspective, this presents an exciting opportunity for accelerated value creation. New backers can pick up where existing owners have left off. So, what can healthcare businesses do to maximise their value?

Private equity firms invested over £140 billion across 1,227 healthcare deals in 2019.

A robust digital strategy is key

 

According to our research, more than 50% of traditional healthcare providers have yet to reap digital transformation rewards. Having a defined digital strategy and roadmap energises an organisation, embedding a culture of change and creating a framework against which to evaluate effort.

 

A good digital strategy is a living document that reacts to business priorities and demonstrates a route to additional value that stretches beyond the current ownership. The very presence of a considered and documented digital strategy demonstrates the quality of thinking, potential for additional future value creation, and availability of high return on investment opportunities for current or future backers.

 

The wiring under the board

Our research highlighted missed opportunities in several areas of the technology stack of healthcare businesses. But our experience shows that what many businesses need to look towards is a  broader  transformation. With the capabilities of the modern digital toolset, it is not just a question of a better website or more efficient marketing, but the potential for a redesign of how the business operates, driven by contemporary digital technology.

 

PE-funded businesses are driven by efficiency and increased value – this is the promise that digital transformation delivers. Contemporary enterprise solutions move the customer to the heart. These are not a series of disparate toolsets welded together, but content management, CRM and sales platforms that are massively scalable. They allow a business to reshape and automate manual processes, bring personalisation and omnichannel experiences to life and allow even smaller businesses to compete with Amazon-esque functionality and service.

 

However, our research shows the healthcare sector has much catching up to do if it wants to be a customer-centric value-creating growth sector.

Building on an enterprise platform

 

When thinking first about a portfolio company’s external image, its message to its audience or the brand that needs to be built around the service, it all starts with a website. Our research found that the dominant system used in the sector is WordPress. 85% of the websites surveyed are running on the free Linux-based CMS. However, WordPress is an increasingly dated platform, with a long history of security vulnerabilities, slow code and an overreliance on third-party plugins. It’s simply not fit for purpose for businesses with growth trajectories, especially those potentially collecting sensitive data.

Healthcare companies should instead be looking to more scalable, secure and contemporary CMS, such as Sitecore, Umbraco or EpiServer.

Winning with omnichannel healthcare

 

It’s not just the digital ‘face; of the company and their CMS that’s an issue in the sector. In delivering their service or looking after their client, healthcare companies need to introduce omnichannel thinking to their processes to meet customer needs better.

 

Healthcare is a fragmented sector, one where richer, omnichannel experiences are currently lacking. By omnichannel, we mean integrating data, technology, content and communication through digital channels to improve the patient experience. The opportunity is there – between mobile, apps, wearables, sensors and Cloud tech. Companies need to deliver seamlessly connected journeys that offer higher satisfaction, lower costs and radically improved sales.

 

 

 

Content is (still) king

 

Finally, while the vast majority of businesses surveyed have a content strategy in place, nearly all suffered from low engagement. Businesses need to focus on creating content that delivers a consistent and engaging experience at each stage in the journey. For the content strategy to succeed, it must connect the dots across owned, paid and earned media platforms, delivering fresh content that people engage with and want to share.

Conclusion

As healthcare businesses start to think about their exits, it is imperative to prepare a documented digital assessment and a 24–36-month strategy. By demonstrating efficiencies, planning growth and describing new value sources, businesses will position themselves for competitive processes and attractive valuations in their next transaction.

This article was originally published in Global Banking & Finance Review, April 2021.

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