Internet medical startups attract many cross-border acquirers, what does this trend mean for those companies seeking to be acquired? The author believes that the following overseas trends may be staged in China. Take a look at Rock Health\'s U.S. market watch below. What does this trend mean for companies looking to be acquired, as Internet healthcare startups attract many cross-border acquirers? The author believes that the following overseas trends may be staged in China. Take a look at Rock Health\'s U.S. market watch below.
As mergers and acquisitions within the healthcare industry heat up, it is inevitable that non-medical institutions will want to get a piece of the action. In the first quarter of 2015, we saw sports apparel brand Under Aromour acquire MyfitnessPal for $475 million and Endomondo for $85 million. And last year, Cognizant\'s acquisition of Trizetto, a healthcare payment management company, was the largest known acquisition. The outsourcing services company sold Trizetto for $2.7 billion. Not to be outdone, several other non-healthcare companies have acquired several healthcare companies that had been backed by venture capital firm Rock Health. MyFitnessPal\'s acquisition of Sessions, Weight Watchers\' acquisition of Wello, and Google\'s acquisition of Lift Labs are just a few examples.
Why is non-traditional acquisition-led activity on the rise?
Today, non-traditional healthcare companies are increasingly investing in the Internet healthcare industry, a trend that shows that these investors have come to realize that they can benefit greatly from integrating healthcare into their business model. In addition, consumers\' growing purchases of medical-related goods, whether for medical reasons or to maintain health, have created an appropriate market for the "B2C e-commerce model." Starting in 2013, Rock Health began counting the number of acquisitions that took place in the Internet health space. Of all the acquisitions counted so far, 33 have been made by non-healthcare companies, with a total value of $5.2 billion, accounting for 20 percent of the total (traditional healthcare companies accounted for 23 percent). Non-traditional healthcare companies are also investing heavily in consumer personal health, such as personal health tools and personal health monitoring devices.
How do traditional medical companies view this issue?
The policies of traditional medical companies are already destined to tilt, and companies will take more care of consumers\' health. However, there are many traditional health care stakeholders, such as pharmaceutical companies, medical device manufacturers, consumers and healthcare providers, for whom the role of Internet health care is less clear. Never before in history has a consumer been able to see a doctor at the click of a confirmation button, and some medical industries have become completely reduced to a doctor intermediary. Leslie Silverglide, then co-founder of Wello(now acquired by Weight Watchers and its first tentative acquisition) and now VP of product management at Weight Watchers, also commented on digital health: "The concept of Internet health care has just come out, and there has not even been a successful listing in this industry. The public also has no idea how the industry works. So I think there will still be a large number of people will be on the fence about the prospect of Internet health care.
According to Jeff Royal, director of acquisition licensing at Abbott Vascular, the uncertainty about the future of Internet-based healthcare has made many medical device makers like Abbott less willing to make acquisitions and more willing to pursue partnerships, which they view as less risky than acquisitions. But while traditional healthcare companies tend to be conservative in their approach to innovation, they have a unique competitive advantage. They often have a broader reach among customers and can also establish a strong brand effect among customers. These companies can also use the vast amount of practical experience they have gained in commercial trade to help foster a good healthcare regulatory environment. The unique role of these traditional health companies makes them a good partner in helping start-ups solve thorny health problems.
On the other hand, Steven Rubis, a sell-side equity analyst at Stifel Investments, is optimistic about the prospects of pharmaceutical companies, which he believes can play a huge role in medical niches because they can secure a place for digital health technologies in such markets. The role of the pharmaceutical industry is now much more than diagnosis, treatment and statistics. They need Internet medical technology and hope to use it to find a more comprehensive way to reduce costs and ultimately succeed in keeping prices stable. In 2014, five Internet health companies were acquired by pharmaceutical companies.
So what do you need to consider if you want to be acquired?
There are five basic principles that can really identify which acquiring companies are serious about buying, and they apply to both non-traditional and traditional healthcare companies.
1. Get closer to companies that share your goals. "I would never approve of an acquisition if we didn\'t share the same business goals," says Nick Crocker, co-founder of behavioral coaching company Sessions and now head of product at Myfitnesspal. In our first meeting, the acquirers made it clear that they were interested in the exact same things as us." Shortly after Sessions was acquired by MyFitnessPal, Myfitness was acquired by UnderArmour.
2. Find out what motivates the potential acquirer. The motives of any acquirer are different. Good partnership and the existence of co-investors can not only make both parties in the acquisition process in a relatively equal relationship, but also make you more clearly understand the acquisition strategy and acquisition objectives of the acquirer.
3. Be able to act on opportunity. Sometimes, a successful acquisition requires a bit of luck, or at least an understanding of the changing market situation. "When we started, we were fighting alone. But it wasn\'t long before we saw new medical companies springing up. Sliverglied said, "Many companies have held multiple rounds of fundraising. It seems like they\'re in a race to win over more consumers, defined by market spending. From this point of view, Wello\'s acquisition makes sense.
4. Create a sense of urgency for the acquirer. If you are negotiating with only one acquisition firm, it may deliberately slow down the acquisition process so that it can fully value you, or lower your profile by dragging out negotiations. In such cases, deliberately courting other buyers may allow the acquiring firm to close the deal faster (venture capital also has this trick). However, especially when negotiating with a large company, the pace of negotiations can be much slower than the pace with which start-ups are familiar. This is important for startups to know.
5, to make people feel that this is a path with great potential for success. Buying your business means seeing the potential for an exit "both to help the acquirer\'s business succeed next and to be acquired by a larger potential acquirer," Crocker says.
Source: Arterial Network