DUE DILIGENCE REVIEWING AND INVESTMENT DECISIONS
The healthcare sector is made of many different industries – from pharmaceuticals and equipment to health insurers and hospitals. Each has different dynamics. Many variables affect the Investment selection in this sector, including positive trends related to demographics and negative trends related to reimbursement.
Due diligence helps to form a mental picture or diagram of a newly researched company; first step is determining the scale of the company and potential investments within. For example, large cap and mega cap companies tend to have more stable revenue streams and less volatility. Meanwhile,mid cap and small cap companies may only serve single areas of the market, and may have more fluctuations in their stock price and earnings.When you start to examine revenue and profit figures, the market cap will give you some perspective for taking investment decisions.
The investment due diligence checklist helps in considering a potential medical technology investment; it is generally better to look for a company dedicated to new technologies and innovation. New products typically offer better performance and those improvements typically command a premium price and drive market-share shifts to the new product.
Financial due diligence process can reveal a great deal about a potential partner. The acquiring entity’s accountants and tax advisors should review the following elements of a target entity’s finances:
- Current financials;
- Audited financials for the preceding six years;
- All tax returns filed within the last six years;
- Audit letters from any tax authority for the past six years, as well as determination letters regarding same;
- A statement regarding the accounting methods used by the target and any changes in them;
- Payer mix data.
At Topmed, we understand the importance of relying on trusted sources either as buyer or seller. Topmed assists in healthcare transactional due diligence process, to authenticate the genuineness of the deal, through thorough evaluation, as well as to emitigateany risk involved in the execution of the transaction.