Leading adviser on M&A and fundraisingto the global marketing, technologyand healthcare sectors

THE BULLETIN:ISSUE 72

IdentityResolution

ALSO IN THIS ISSUE:

David Sanders joins Results: expansion into care servicesNavigating an M&A process: an interview with Johan Nordenström at KaplanRaising growth capital: best practices for a successful fundraise

ABOUT RESULTS INTERNATIONAL

MARKET SECTORS

MARKETING TECHNOLOGY HEALTHCARE

Results International has been providing independent M&A,

fundraising and corporate finance advice to entrepreneurs,

corporates and investors in our sectors for over 25 years.

With offices in Europe, the Americas and Asia, we are

specialists in cross-border transactions.

Our focus reflects the dynamic

transformation of the sector in recent

years, covering all areas of marketing,

including digital transformation,

customer engagement, content,

search, social, data and media.

Results International Group LLP is Authorised and Regulated by the Financial Conduct Authority. This document is intended for use by professional clients only.

Our expertise spans all areas

of technology, including enterprise

software, technology services,

cybersecurity, marketing and

commerce software and healthtech.

Our experience covers both

healthcare and life sciences, and

includes healthcare comms and

consulting, healthtech, CROs and

CMOs, as well as pharma, biotech

and medtech.

www.resultsig.com2

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www.resultsig.com

IN THIS ISSUE...

6-9

10

12-15

16-17

18-19

20

21

IDENTITY RESOLUTION: THE KEY TO UNLOCKING MODERNMARKETING AND BEYOND BY PAUL GEORGES-PICOT

MARKETING M&A REMAINS STRONG, DRIVEN BY MARTECH AND ADTECHBY JAMES KESNER

DAVID SANDERS JOINS RESULTS: EXPANSION INTO CARE SERVICESBY DAVID SANDERS

NAVIGATING AN M&A PROCESS: AN INTERVIEW WITH JOHAN NORDENSTRÖM AT KAPLANBY JULIE LANGLEY

RAISING GROWTH CAPITAL: BEST PRACTICES FOR A SUCCESSFUL FUNDRAISEBY MARK WILLIAMS

GENOMICS: A SOURCE OF FUTURE DEAL ACTIVITY FOR THE US MARKETBY PIERRE-GEORGES ROY & VAN HAMILTON BARBEAU

AGENCY ACCELERATION DAY, APAC: MANY REASONS TO BE OPTIMISTIC BY CHRIS BEAUMONT

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www.resultsig.com4

has been acquired by a

Tier-1 CRO

has been acquired by

OUR EXCELLENT ACCESS TO A WIDE RANGE OF US BUYERS

Hospira, a Pfizer company, has divested its UK

compounding business to

has been acquired by

has been acquired by

has been acquired by

has been acquired by

has been acquired by

has received investment from

has been acquired by

has been acquired by

BOMGARGeorgia

McKESSONTexas

K1 INVESTMENT MANAGEMENT

California

HEWLETT PACKARD ENTERPRISE

California

BAXTERIllinois

BRUKERMassachusetts

Tier-1 CRONorth Carolina

WEBER SHANDWICKNew York

THE STAGWELL GROUPWashington DC

SYKESFlorida

MERKLEMaryland

www.resultsig.com 5

OUR EXCELLENT ACCESS TO A WIDE RANGE OF US BUYERS

We wouldn’t hesitate to recommend Results International as an excellent advisor. Throughout the process they more than demonstrated that they truly do have unrivalled sector knowledge and really understand how to position fast growth, digital media and performance marketing businesses with a view to optimising value.

Graham Coxell Chairman, Forward3D

“ ”This is the second transaction Results have led for us. They really understand the security and enterprise software markets and worked tirelessly to achieve really successful outcomes in both transactions.

Paul Kenyon and Mark Austin Co-founders and Co-CEOs, Avecto

The Results International team has many strong relationships with both the strategic and financial buyers in the Healthtech and Informatics sector... we highly recommend them to anyone in our sector considering a strategic transaction.

Peter Rosati CEO, Arxspan

“ ”“ ”

6 www.resultsig.com

grown a little denser. Nestled under the data

management platform (DMP) category, and to

the right of the customer data platform (CDP)

grouping, lies a new class of martech: identity.

With the influence of Amazon, GDPR now

in full motion, and the mounting scrutiny

of Facebook’s data privacy practices, it is

increasingly clear that competing in today’s

data-driven marketplace requires direct

customer relationships. Which makes identity

more than a nice-to-have, it’s an absolute

imperative, but also one of the most difficult

problems to solve.

Identity, in its most basic sense, is the

connection point between all customer

engagements, online and offline, past and

present. For true identity resolution to occur,

a technology solution must not only be able to

match and distribute data in real time, freely

and directly to any endpoint but also persist and

evolve this data throughout the lifetime of the

customer relationship.

The big walled gardens — Facebook, Google

and Amazon — can approach each user as a

single identity, since users of these platforms

are usually logged on but this has left many

brands and data providers outside the

gardens managing a variety of approaches to

come up with unified identities for customers

and prospects.

The problem, according to Richard Foster,

UK Managing Director at identity resolution

provider LiveRamp, has been that “marketers

must either target audiences in the same

walled gardens where their preferences are

shared, or use cookie data for web interaction

without much context beyond their customers’

browsing history.”

As a result, technologies that help solve this

conundrum are in-demand. Acquisitions and

fundraising in the space have dramatically

increased in 2019. The ability to hyper-

personalise interactions with customers

has attracted a wide variety of buyers and

investors including some that are unexpected

such as McDonald’s, Nike, or commercial data

vendor Dun & Bradstreet. Private equity is also

gaining appetite for this sector as shown by the

acquisition of Attunity by Thoma Bravo-backed

Qlik or the acquisition of Acquia by Vista. The

same goes for the VC community with a record

level of investments in CDPs and customer

experience platforms (CXP) in H1 2019. CDP

company Segment raised $175 million in a

Series D round in April, making it the largest

raise in the space and one of the largest in

martech altogether in the past two years.

Looking at deals in the space, there is a long

list of ways to apply identity resolution to

marketing, but the most important applications

and techniques are:

1. Marketing lists: Multiple messages to

the same person on email or direct mail

lists are costly to deliver and can be

annoying to receive. Identity resolution can

remove duplicates whether they result from

the same person appearing on multiple

lists or from duplication within a single

list. Cleansing and removing duplicates is

therefore a critical capability when selecting

an identity resolution technology.

2. Cross-device targeting: This works

with a device list rather than personal

identifiers. The devices may be linked to

known individuals or not. It supports direct

contacts, such as text or in-app messages,

as well as mobile advertising through

external networks. Techniques used

include probabilistic match for a cross-

device and deterministic match for device-

to-person.

“Never forget what you are, for surely the world will not. Make it your strength. Then it can never be your weakness. Armour yourself in it, and it will never be used to hurt you.” At the risk of contradicting the father of Game of Thrones George R.R. Martin, the world (the business world that is) tends to forget who people are, which is definitely a weakness, worse, it will often be used against them!

The complex process of linking people’s

online and offline behaviour to their unique

identity by gathering different data sets and

identifying non-obvious relationships gave rise

to an exponential number of identity resolution

& management software solutions in the past

few years. Major applications include: (i) risk

management: manage risk, detect fraud, and

ensure compliance with regulations against

money laundering and other economic and

trade sanctions; (ii) operational optimisation:

enhance the effectiveness of regulatory

compliance, law enforcement, and security

operations; (iii) maximisation of technology

investments: reduce implementation costs

of third-party applications and development

costs of customised applications; and

(iv) customer experience enhancement:

identify customers with a single, more

comprehensive and accurate view.

This last application having the most

measurable and clear impact on ROI in the

short term (by reducing customer turnover

and improving customer contact methods)

was the first to take off. As a result, the

imposing cluster of logos representing the

marketing technology landscape has recently

IDENTITY RESOLUTION: THE KEY TO UNLOCKING MODERN MARKETING AND BEYOND

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www.resultsig.com 7

Sources: CapIQ; Mergermarket; 451 Research; AdExchanger, MarTech Advisor, and Results International analysis

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DATE

AUG 19

SEP 19

APR 19

MAY 19

JUN 19

Q1 19

-

-

50m

-

300m

175m

-

-

300m

-

-

70m

-

70m

7.6m

55m

560.6m

35m

Predictive marketing and sales analytics that connects to revenue and incorporates “talk tracks” to guide sellers through sales conversations

B2B data aggregator

Digital customer experience optimisation

Analytics tools for publishers and marketers to get to know their users through email, web and mobile applications

Probabilistic X-device ID company acqui-hire. beyond talent, should help LinkedIn with attribution and lookalike targeting

CDP

Identity management platform with a focus on viewability and measurement

B2B customer success platform designed to reduce churn, grow revenue and maximise customer lifetime value

AI-powered omnichannel personalisation & recommendation. Largest McDonald’s acquisition in 20 years

SaaS data quality and identity management platform

Lattice adds CDP capabilities to D&B’s commercial data & analytics and growing portfolio of sales and marketing solutions

Cross-platform ad optimisation

Provides (i) an Integration Platform as a Service (iPaaS) connecting to CRMs, ERPs, marketing, email, support, finance and e-commerce systems; and (ii) a SaaS solution that unifies customer data across cloud applications

Customer experience management. Series F fund in February, IPO’d in July

Customer behaviour analytics start-up

CDP

Attunity focuses on Change Data Capture (CDC) to facilitate data ingest, replication and integration of streaming and conventional data

CDP

TARGET ACQUIRER EV/AMOUNT RAISED(US$) TARGET DESCRIPTION

SELECT Q1-Q3 2019 M&A AND FUNDRAISING IN IDENTITY RESOLUTION

Series D

Series D

Series C

Series C

Series F

Series F

8

DATE

SEP 19

MAY 18

JAN 17

MAY 19

MAR 19

FEB 18

OCT 16

JAN 16

NOV 18

JAN 18

JUL 18

OCT 17

JUN 18

JUL 17

TARGET ACQUIRER/ INVESTOR

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www.resultsig.com

Sources: : CapIQ; Cision; BusinessWire; Company websites; Results Healthcare research

SELECT 2016-19 M&A IN HEALTHCARE: CUSTOMER ANALYTICS IS INCREASINGLY PERSONALISED

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Tier-1 CRO

3. Ad targeting and retargeting: This

starts with creating a marketing list but

then uses identity resolution to connect

with external identifiers, such as cookies in

a Data Management Platform or ad network

or audiences in a social media platform.

4. Website personalisation: Identity

resolution can connect a web visitor to their

unified profile and use this data to select

optimal treatments based on their complete

history.

5. Customer service: Identity resolution

allows phone or chat agents to know who is

calling and find their records. This saves

time and makes the customer feel

recognised.

6. Omni - channel programs: Cross-

channel identity resolution makes it possible

to truly coordinate customer treatments,

starting with identifying customers

wherever they appear and continuing with

selecting treatments based on a complete

profile and having continuous conversations

across channels over time (including online

and offline).

While all companies — and their solution

providers — have different needs, approaches

and levels of accuracy, several initiatives may

soon supplant the need for these kinds of

identity resolution by brands or their solution

providers. There are three initiatives underway

to populate the web and other channels with

a single ID. The Interactive Advertising Tech

Lab’s DigiTrust and The Trade Desk’s efforts are currently focused on the web, while the Advertising ID Consortium — closely connected to LiveRamp’s multi-channel IdentityLink — seeks to create an ID across other platforms as well as the web.

Being able to engage customers at the individual level (vs. at the audience level) and personalise interactions is a common goal across sectors. As a matter of fact, the more a customer within a given vertical generates data across disparate data sources the more likely that vertical is going to seek solutions to aggregate those data sources to better engage with customers.

This is also true for the healthcare,

pharmaceutical and life sciences industries

Paul Georges-PicotE pgeorgespicot@resultsig.com

www.resultsig.com 9

which are relentless producers of data.

To put it into perspective, the human body

contains nearly 150 trillion gigabytes of

information. That’s the equivalent of 75 billion

fully loaded 16GB Apple iPads, which would

fill Wembley Stadium to the brim 41 times.

Imagine collecting that kind of data for an

entire population. The vast amount of data

generated and collected by a multitude of

stakeholders in healthcare comes in many

different forms — insurance claims, physician

notes, medical records, medical images,

pharmaceutical R&D, conversations about

health in social media, and information from

wearables and other monitoring devices. The

power to access and analyse enormous data

sets can improve our ability to anticipate and

treat illnesses. This data can help recognise

individuals who are at risk of developing

serious health problems.

The ability to use big data to identify waste in

the healthcare system could also lower the

cost of healthcare across the board.

The number of M&A transactions in healthcare

customer analytics has been growing at a

steady pace as a result, with one deal every

quarter on average since January 2016.

Although healthcare is a prime candidate for

identity resolution due to the amount of data

generated by its stakeholders, the need to

establish a link between data and individuals

can be applied to virtually any sector but also

within key support functions in organisations.

Some of the most widespread applications are

in IT and cybersecurity. Results International

recently advised identity and access

management (IAM) services provider Intragen

on its investment from FPE Capital. IAM in

enterprise IT defines and manages the roles

and access privileges of individual network

users and the circumstances in which users

are granted (or denied) those privileges. Those

users might be customers (customer identity

management) or employees (employee

identity management). Technologically, the

emphasis of the majority of IAM services is

on preventing external threat actors. As a rule,

hackers look for the easiest means of entry

ports into IT environment. Login portals provide

these ports; only by constantly verifying the

legitimacy of users can sensitive assets be

protected from external threat actors.

Sensitive corporate information is increasingly

at risk outside of the traditional enterprise

firewall due to the current hybrid environment

of physical, mobile and cloud. Data is

ubiquitous and users demand constant access

to it wherever they are. IT teams are struggling

to protect this information and need to know

the users accessing the data are really who

they say they are. In the past, IT teams had a

high visibility on who was accessing sensitive

information and where they were moving it on

the network. But it’s a different environment

today with users accessing data through

cloud and mobile applications—and often

on their own personal mobile devices and

unsanctioned cloud applications. Behaviour

monitoring capabilities also help ensure

identity security by verifying whether the users

act like themselves while connected.

Insider threats represent an even more

nefarious danger to databases and digital

assets. Malicious insiders already possess

legitimate credentials into companies’

networks. Thus, their login attempts and

activities normally don’t arouse the suspicion

of IAM solutions. As a result, malicious insiders

can more easily conceal their activities within

their everyday business processes. Privileged

access management (PAM) and identity

governance and administration (IGA) form the

backbone of internal identity security. Identity

governance works to enable automated and

monitored role management throughout the

entire enterprise. Indeed, it can help define

the permissions of specific roles, ensuring

each only possesses the absolutely necessary

access it needs. Furthermore, IT security

can use IGA to review specific identities and

ensure they only have the bare minimum of

necessary access; if they detect an issue, they

can remove permissions at will.

Identity governance therefore has

implications for human capital management.

ID governance is starting to automate the

onboarding process, which ensures accounts

do not linger after the employee leaves the

enterprise. Privileged access management

not only protects users from external actors; it

also helps regulate which privileged identities

can access an IT environment. For example,

the heads of HR should not possess access

to banking resources; conversely, CFOs

shouldn’t have access to sensitive employee

files. Ultimately, identity governance needs to

ensure access rights are controlled in such a

way as to balance the need for security and

compliance, while ensuring employees are

able to be as productive as possible.

Although identity resolution applications are

driven by the marketing industry’s desire

to avoid the inaccurate and costly effort

of massive cookie-matching that currently

takes place, the ability of companies to

leverage data to know and engage with their

customers / employees / stakeholders at a

hyper-personalised level is only just beginning

and will increasingly impact many aspects of

corporate practices and everyday life.

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Marketing sector M&A and fundraising activity in the first three quarters of 2019, was driven by Marketing & Sales Technology and Adtech deals (up 52% in aggregate versus the same period last year), whereas the number of deals in marketing services was strong but flat (636 versus 634 in the first nine months of 2018). There were 1,057 global deals in total from Q1 to Q3 – up 16% on the same period in 2018.

The headline deal in Q3 2019 was Bain Capital’s acquisition of Kantar Media for $4 billion – part of WPP’s continuing restructuring and refocusing plan. Other large deals worth mentioning include Vista Equity Partners’ acquisition of Acquia for $1 billion, Blackstone’s acquisition of Vungle for $750 million and Veeva’s $430 million purchase of Crossix.

Advertising & Creative Agencies was the most active marketing services subsector in Q3. Within advertising & creative agencies, more than half of the deals were in the full service and integrated agencies. This is the continuation of a long-term trend in advertising, namely that marketers are keen to buy businesses that have an integrated offering with a full-funnel proposition and the ability to build and activate digital experiences at scale.

10

153

133

105

JAN FEB MAR APR MAY JUN JUL AUG SEP

391

Q1

117

133

104

354

Q2

111103

98

312

Q3

www.resultsig.com

Within Marketing and Sales Technology,

marketing automation, content production and

syndication, and data unification continue to

be the most active subsectors. This highlights

brands’ and marketers’ ongoing need for

speed and highly personalised customer

engagements.

Data-driven personalisation continues to lie at

the heart of what brands and marketers are

looking to achieve and is behind some of the

more intriguing deals this year, bringing yet

more new acquirers into the space.

There were 86 Adtech deals worldwide in Q1-

Q3, up 83% from the 47 deals completed in

Q1-Q3 2018. A notable deal in this space was

Blackstone’s $750 million acquisition of Vungle,

a mobile advertising and app monetisation firm.

MARKETING M&A REMAINS STRONG, DRIVEN BY MARTECH AND ADTECH

The third quarter of 2019 saw a slight drop

in the number of private equity deals across services and technology: 74 in Q3 compared to 91 in Q2 and 89 in Q1. Meanwhile, trade buyers have accelerated their external growth this quarter. The top three buyers in Q3 were all trade: Dentsu made four acquisitions, while Publicis and Blue Field (a Netherlands-based full-service agency) made three acquisitions each.

For the first nine months of 2019, the most active buyer was Dentsu with 10 acquisitions across both marketing services and technology, followed by private equity house Insight Venture Partners, whose acquisitions were all additional portfolio add-ons. Ranking third is Accenture with seven transactions, continuing to be the only consultancy to make the top buyers list.

www.resultsig.com

“Accenture is leading the charge by some margin when it comes to management consultancies expanding their footprint in the marketing space...”

“Data-driven personalisation continues to lie at the heart of what brands and marketers are looking to achieve and is behind some of the more intriguing deals this year, bringing yet more new acquirers into the space...”............................................................

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MONTHLY DEAL VOLUME

TOP BUYERS

* MARTECH DEFINED AS SALES & MARKETING TECHNOLOGIES, ECOMMERCE TECHNOLOGIES, WEBSITES CREATION & OPTIMISATION.** ADTECH (DEFINED AS SEARCH AND ADVERTISING TECHNOLOGIES).

Advertising & Creative Agencies

Marketing & Sales Technology

AdTech

Events & PR

eCommerce Technology

Specialised Vertical Agencies

80 86

326

64

79

173

326

86

DISCLOSED DEAL VALUEQ!-Q3 2019

US $20.2 BILLION

06

08

10

07

06

INSIGHTV E N T U R E P A R T N E R S

THOMABRAVO

accenture

TOP MARKETING SECTORS

James KesnerE jkesner@resultsig.com

Download the Marketing M&A infographic at: resultsig.com/insights

11

UPCOMING EVENT:RESULTS INTERNATIONAL PANEL EVENT

WEDNESDAY 27TH NOVEMBER 2019THE HOSPITAL CLUB8:30am - 10:30am

Selecting the right partner for growth: PE or Trade

The rapid rise in private equity investment in technology, marketing services and healthcare in recent years has provided a really interesting alternative to founders seeking to de-risk, accelerate growth and find the right partner for the next phase of their development.

There are some material differences – and similarities – between selling to a trade buyer and partnering with private equity, and understanding how they differ and what each brings to the table, is key to making the right choice.

We are bringing together a panel of successful entrepreneurs that have had

experience with both private equity and trade, to share their insights on

what to expect from each and how to choose the right partner for you.

The event is designed for entrepreneurs / CEOs / founders / business

owners, and we will focus on sharing practical and hard-earned advice on

the following:

SPEAKERS

TOPICS TO BE DISCUSSED INCLUDE:• Choosing between PE and Trade

• What each one brings to the table

• What to expect post-deal

• Different investment horizons

• Choosing the right partner

• Preparation: differences between a PE vs Trade or dual-track process

We would be delighted if you can join us for this panel session, a light breakfast and networking. Spaces are limited and filling up fast so please register your interest soon.

Dennis O’Brien Lucid Group

Paul KenyonAvecto

Julie LangleyResults International

Rob WoodSTEM

REGISTER NOWresultsig.com/event/selecting-the-right-partner-for-growth-pe-or-trade/

best part, however, is that the sector attracts

some managers who have a real sense of

vocation – it is a privilege to work with people

who are driven, as many are, by a desire to

improve the lives of people receiving care.

“It is a privilege to work with people who are driven, as many are, by a desire to improve the lives of people receiving care...”

What is the most interesting deal you’ve worked on?

I led the sale last year of a division of a public

company. It was interesting from a technical

point of view, because it was a carve-out

with some technical complexity, but we also

had an interesting development shortly

before launch – the company lost its most

profitable contract, and then another in quick

succession. In situations like that, you really

feel like your advice counts – much more so

than if a company is beating every forecast

and no surprises happen. Our client decided

a sale was still their preferred outcome, so we

working practices, we take for granted were

absent or just emerging. My first employer

was ING Barings, who ran a heavily staffed

information centre, whose job was to help

junior bankers dig out data for use in projects

and pitches. I remember one of the team there

answering a query by referring me to this new

and interesting website called Google.

The world has moved on a long way from

there and changing client expectations are

always driving how advisory firms operate.

ING Barings, for example, was mostly set up

to provide general M&A advice, but as time

has gone by, sector specialism has gone

from being a rarity to a necessity. If there’s a

common thread in my career to date, it has

been that – a gravitation from a generalist

environment at the outset, to DC Advisory

where I first began to specialise in healthcare,

to Results Healthcare where of course it is the

focus of the whole team.

Care Services is a sector that I would

take interest in even if my career took me

elsewhere – for better or for worse, it is strongly

influenced by the political environment, but

you can also see societal shifts playing out in

the care arena. For example with regards to

how mental health issues are addressed. The

We are delighted to announce that David Sanders has joined Results International as a Managing Director in our healthcare team, Results Healthcare. David will work globally based at our London office. With his appointment, Results Healthcare will for the first time expand into care services advisory, encompassing residential care, home care and multi-site medical services.

David brings nearly two decades of advisory

experience and is a highly knowledgeable

healthcare banker. In his career as a sector

specialist, David has advised clients across

private and public markets on pharma

services, healthcare infrastructure, care

services, medical technology and cross-

border transactions.

Tell us about your career before Results Healthcare, and what is it you love about care services?

I started my career in 2000, when the City

was afloat on dotcom hysteria and a lot of the

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“As time has gone by,

sector specialism has

gone from being a

rarity to a necessity...”

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DAVID SANDERS JOINS RESULTS: EXPANSION INTO CARE SERVICES

www.resultsig.com 13 www.resultsig.com

changed course, assembled a different bidder

group, worked hard to keep the momentum

up, and ultimately got our client the exit they

were looking for.

What led your decision to join

Results Healthcare? And why now?

I had noticed some of the deals Results had

been advising on – they are clearly making an

impact on the market, so I came to the first

meeting with a healthy respect already for

the work Results were doing. I was attracted

by the chance to work in a sector-dedicated

team, where everyone from top to bottom has

the same focus – I think this allows clients to

benefit from a different level of insight. The

clincher was that the culture at Results is

very positive and progressive, which makes

me proud to be associated with the firm. I’m

joining at an exciting time for our team, as we

expand our breadth within Healthcare, and as

we add scale to build on recent successes.

It’s an exciting time with Results

Healthcare expanding its care

services advisory. What areas of

care services do you specialise in?

I am a healthcare M&A advisor, so care

services is a part of what I do rather than the

totality. Even within care, though, the spread

is broad, encompassing residential care,

children’s services, dentistry, eye care and

more. That’s a good thing – the variety makes

for an intellectually stimulating sector to

work in.

We have six values – which one

resonates with you the most?

Communication. I think it’s something advisers

get wrong quite a lot as a professional body,

and certainly as an individual I can sometimes

put tremendous thought and effort into the

precise wording of an email or presentation

slide, but not enough into the basics, which

are at least as important, whether internally

or externally. So, I am relieved to be in an

environment where it’s expected that everyone

is talking to everyone all the time – it makes for

a buzzy atmosphere, which I think carries over

into the way we work with clients.

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“I was attracted by the

chance to work in a

sector-dedicated team,

where everyone from

top to bottom has the

same focus...”

14

FIGURE 1: THE EVOLUTION OF THE ADULT SPECIALIST CARE MARKET

Cottage IndustryFounder-Owners

predominate

Real Estate InvestmentExpansion of Capacity

CONCENTRATION RATIO

PROPORTION OF SUPPLY PROVIDED BY THE INDEPENDENT SECTOR

Private Equity Investment Consolidation

Emergence of Scale Operators

Severe Budgetary ConstraintsWidespread Indebtedness

Drop in External Investment

Emergence of Infra & Overseas Strategic Buyers

Stabilised Funding

C.18% 51% 82% 95%

<5%

7.5% 10.2%

1980S 2006 2011 2019

Sources: UK Healthcare Market Review, 31st edition, 2019, LaingBuisson, The Role of Private Equity in UK Health & Care Services, July 2012, LaingBuisson, Laing’s Healthcare Market Review 2006 – 2007, 19th edition, September 2006, LaingBuisson, The Changing Role of Care Homes, Nat Lievesley, Gillian Crosby and Clive Bowman, January 2011, Bupa and Centre for Policy on Ageing

www.resultsig.com

INVESTMENT IN THE CARE SERVICES SECTOR:

As a sector for external investment, the UK Care Services market hardly has novelty value – the sector has been shaped for decades by successive waves of capital from private and institutional investors.

Equally, while success stories proliferate, there

have been several high-profile failures, of which

the Four Seasons saga is only the most recent,

which has brought unnecessary disruption to

vulnerable service users as well as financial

losses. In today’s somewhat uncertain market,

should investors be prioritising care services?

In our view, the case for investment in the

sector is compelling. Firstly, as with many

healthcare segments, care services stands to

benefit as long-term demographic shifts play

out. The UK’s population is ageing and growing

modestly but steadily, driving growing demand

for elderly care. In specialist care, drivers are

similarly positive, with demand supported by

higher life expectancies.

Operators, then, can have high confidence

that volumes will grow over the longer term,

and that their services will continue to be

essential. These tailwinds, however, have

been evident for many years. What makes the

present environment particularly favourable

is the combination of these long-term volume

drivers with a more stable backdrop for the

prices care operators can negotiate with

commissioners.

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staff shortages, posing risks to care quality as

well as further inflating staff costs.

Beyond this, the sheer operational intensity

of generating acceptable returns while

maintaining a good standard of care across

a portfolio of care settings is undeniably

high, and even in the best-run business, the

possibility of care incidents or harm to service

users can never be eliminated.

“Against this backdrop,

it is perhaps not surprising

that new investor types

have emerged on the

scene...”

For some investors, these risks may be too

great to justify investment, but for those

prepared for the challenge, the opportunity is

clear. In the care sector, the best management

teams are those that are motivated by making

a difference to the lives of the individuals

in their care, and in the long run, the best

investors will be those that never lose sight of

this principle.

In the wake of the general financial crisis

from 2008, the sector in the UK as a whole

saw significant volatility in fee rates. While

experiences varied greatly between regions

and care settings, most state-funded markets

within UK care saw real-terms fee declines as

commissioners sought savings in a climate of

austerity. A decade on from the crisis, and with

the two largest UK political parties competing

to outdo each others’ funding promises, most

operators are now seeing improved prospects

for pricing.

Perhaps the clincher for investors is that

most areas within UK care continue to offer

the opportunity to create platform businesses

in fragmented markets, and to play a part in

consolidation as these markets mature. The

UK care landscape now features more truly

large-scale operators than ever before, but

even with the emergence of the likes of Priory

Group and NFA, the buy-and-build thesis

remains intact – in adult specialist care, for

example, the top 10 providers still account

for well under 20% of the market (see figure

1). Unlike many sectors, care services is not

dominated by a handful of giant strategic

groups whose manoeuvres can decide the

fate of smaller operators – rather, we are in

the stage of consolidation where enough

strategic buyers have emerged to create exit

opportunities, without really limiting the scope

for smaller businesses to grow. David SandersE dsanders@resultsig.com

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15

Against this backdrop, it is perhaps not

surprising that new investor types have

emerged on the scene. Sale processes in

recent years have seen an increased presence

from non-UK buyers, from real estate-

focused investors and, most notably, from

infrastructure investors, many of whom have

identified healthcare as a ‘core plus’ sector,

offering robust cash generation, high barriers

to entry, and low correlation to the economic

cycle. It remains to be seen whether the flurry

of interest that saw investment in businesses

such as Kisimul, Choice Care and Regard

Group will persist, but for commissioners, the

involvement in the sector of investors with

such long-term horizons must surely be a

positive.

The care services sector, then, deserves

to be high up the priority list for investors.

Nonetheless, the challenges facing care

businesses should not be downplayed.

One of the most widespread and widely

acknowledged of these challenges concerns

staffing. The issue of how to manage risk and

cost by hiring and nurturing the right people

is a perennial one, but is made more urgent

by the disruption caused by the UK’s likely

departure from the EU. Equally, domestic

factors such as the abolition of bursaries for

nursing students and the popularity of agency

work among nurses and carers are leading to

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“The UK’s population

is ageing and growing

modestly but steadily,

driving growing demand

for elderly care...”

NAVIGATING AN M&A PROCESS: AN INTERVIEW WITH JOHAN NORDENSTRÖM AT KAPLAN

Kaplan was acquired by Accenture Interactive in November 20181. Kaplan provides data-driven customer relationship management services that transform customer experience. We caught up with Johan Nordenström, Managing Partner at Kaplan to discuss his experiences and learnings during his M&A process.

Your business was growing very

strongly independently. Why did you

decide to become part of Accenture

rather than continuing your journey as

an independent company?

Remaining independent was definitely a viable

option. However, we realised that the demand

for our particular area of expertise in CRM

and data-driven customer experience was

growing very strongly; and that we’d be better

able to take advantage of the opportunities as

part of a larger network. We also recognised

that the market was evolving rapidly and we

would increasingly want to be able to provide

customers with end-to-end experience

transformation services, requiring a broader

set of services than we had within our

company at that time. We could grow those

services organically or become part of a larger

group, which is what we chose to do.

What were you looking for in a partner for Kaplan?

We wanted a partner who could help us meet

client demand and accelerate our growth.

Specifically, this meant access to a broader

set of services to enable us to provide the end-

to-end services customers want, and an ability

to scale into new clients and new geographies

more quickly.

However, probably the most important factor was making sure we found a partner that both understood and respected our business including our unique culture, and who would find the right balance between supporting us and giving us the freedom to continue to build on our success. Accenture ticked all these boxes for us.

What was the biggest surprise to you from the M&A process you went through?

I think the biggest surprise for us were the emotional highs and lows, and we had to

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“We wanted a partner

who could help us meet

client demand and

accelerate our growth...”

.......................................................

.......................................................

1 Results International acted as the exclusive financial advisor to Kaplan on the transaction www.resultsig.com

www.resultsig.com www.resultsig.com

and management team. The process is

very intense and time-consuming, and it

can be easy to underestimate the level of

communication required to keep everyone

aligned and engaged. Everyone will have

different perspectives and motivations and it’s

about making sure that they are all aligned as

a company. Clear structures and timetables

around communications can be really helpful

in this regard.

How did you go about working with and getting the most out of your advisors?

We recognised early on that we needed to

have a good team of advisors (both financial

and legal) on our side. We were fortunate that

we’d got to know Results International well

ahead of our decision to consider a potential

transaction and had built up high levels of trust.

That is critical when the process gets difficult

as inevitably it will at some point. We relied

very much on our advisors to negotiate for us

to ensure we didn’t damage our relationships

with the people that would ultimately become

our colleagues, and it’s important therefore to

have an advisor you know will really protect

your interests. I’d also say look for an advisor

who will roll up their sleeves and provide really

strong hands-on support on all aspects of the

deal from start to finish.

A final piece of advice I would give is do

not underestimate the value of speaking to

other entrepreneurs that have been through

a process before – the lessons learned, and

their advice can be invaluable.

“We relied very much on

our advisors to negotiate

for us to ensure we didn’t

damage our relationships

with the people that would

ultimately become our

colleagues...”

adapt to that and the inevitable twists and turns in the process. Perhaps not so much of a surprise, but noteworthy nonetheless was the level of intensity and time commitment at some stages. We knew we needed to be well prepared for the process, and with the help of our advisors we had planned ahead, but the level of detail that was required was certainly eye-opening.

What would you point to as the key deal ‘pain points’ and how did you go about addressing them?

The key pain point was the sheer amount of

time we needed to dedicate to the process.

We had to make sure the business continued

to grow and hit its targets at the same time

as managing the process. As part of this, we

tasked two of the shareholder management

team to run the deal process on a day-to-day

basis, enabling the others to continue to focus

on building the business. Divide and conquer

is the key!

What is the best piece of advice you would give to other firms about to undergo an M&A process?

Never underestimate the power of

communication within the shareholder

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............................................................

............................................................

Julie LangleyE jlangley@resultsig.com

...................................................

“Never underestimate

the power of

communication within

the shareholder and

management team...”

...................................................

17

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RAISING GROWTH CAPITAL: BEST PRACTICES FOR A SUCCESSFUL FUNDRAISE

www.resultsig.com www.resultsig.com

Fundraising from the investor community can be transformational – securing the necessary capital can catapult the growth of your business in a number of ways, whether its organic investment in sales and marketing, securing funding for new product development or enabling new market entry.

There’s no hard and fast rule as to how to

maximise the success of a fundraise or secure

the best valuation but here are some best

practices that we recommend adopting in the

run-up to a raise.

Know your KPI’s

If you’re a B2B software business, you

need to know: your ARR - how it builds and

fundamentally, your churn statistics: on a

pound/dollar/euro basis, how much customer

revenue have you lost during the last year

(“gross churn”) and what is this figure net of

any revenue upsell/customer expansion (“net

churn”). You also need to know your customer

LTV (“lifetime value”) and CAC (“customer

acquisition costs”) and what drives your gross

profit (“gross margin”). These are numbers

that are critical to scale potential that investors

will expect you to be tracking in detail and

have ready at your fingertips.

If you’re a B2C business, you need to

understand your customer cohort, including

the trends that point to repeat customer

purchases, your LTV/CAC, how your take-rate

compares to your competitors and how you

can increase your gross margin.

Know your competitors and prove differentiation

One of the first questions you’ll get asked is

who you compete with and how you differ from

your competitors.This is a critical question for

investors who want to understand how you

sit within the ecosystem or market. Speak to

product differentiation, emphasise performance

metrics (if you have them) and understand the

reasons behind why you do things a certain

way will drive greater revenue and growth.

Use your network

Speak to friends, other founders and

understand how they have built their business

and raised funds. All investors are different

in terms of what they bring to the table and

understanding how your counterparts have

prioritised and made decisions for their

business will give you some solid practical

insight. They may be able to introduce you to

funds and advisors to help you on the journey.

“All investors are different

in terms of what they

bring to the table...”

Hire a good CFO

A seasoned CFO will be instrumental to you

during the fundraise process (investors look

at the financial metrics of a business in a

significant amount of detail) and will help you

........................................................

........................................................

“If you’re a B2B software

business, you need to

know: your ARR - how it

builds and fundamentally,

your churn statistics:

on a pound/dollar/euro

basis...”

18

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build a model for growth that will get investors

excited. They’ll also be crucial as you scale

by understanding how levers of investment in

your business will drive growth and margin.

An operationally focused CFO will be able to

look internally at managing the business so

you can focus externally on new business

lines and growth strategies.

Think globally

The US venture and growth capital funds,

with their strong dollar investment pots are

increasingly seeking investee companies

outside of their domestic market. If you have

ambitions to grow in the US, these funds

typically come to the table with money and

contacts which could prove invaluable. The

same goes for funds with an APAC heritage.

Think about what’s important to you

Along the same lines, think about what you

really want to achieve from raising capital. Do

you only want the money? Do you want some

experienced operators and investors on your

board advising you as you pursue your growth

strategy? Do you want to access a new market

and want a fund that can help you on the

ground? Funds all offer something different

– make sure you ask each fund about their

‘value-add’ beyond the initial cash investment.

Hire a high-quality advisor with

global reach

Fundraising processes are time-consuming

and having the right partner alongside you can

add value in a lot of ways.

A high-quality advisor will work with you

to craft the very best equity story for the

business, positioning and quantifying the

‘total addressable market’ opportunity and

highlighting the KPI’s and messages that

investors need to see.

It’s important to find an advisor who can

connect you globally to the very best investors

across the world, maximising your potential

partner options and one who has experience

in driving a competitive and well-prepared

process that will maximise competitive tension

and valuation.

The right advisor for you will recognise that

you’re leading a fast-growth business that

needs to keep performing well and delivering

to the growth plan – on a practical note, they’ll

be able to take a lot of the process work off of

you to ensure you have the headspace and

time to focus on the business.

If you are considering raising funds or the next

step in your company’s development, we’d

love to have an informal discussion with you

so please do get in touch.

Mark WilliamsE mwilliams@resultsig.com

........................................................

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“If you’re a B2C business,

you need to understand

your customer cohort,

including the trends that

point to repeat customer

purchases...”

19

“An advisor can help you

prepare the positioning of

the business and introduce

you to a wide pool of

investors internationally...”

www.resultsig.com

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GENOMICS: A SOURCE OF FUTURE DEAL ACTIVITY FOR THE US MARKET

Living in a world where a genome can be sequenced for $100 is a future companies are increasingly preparing for by pursuing M&A and capital raising transactions. On the M&A side, between 2013 and 2018, M&A transactions focused on genetic testing totalled $40 billion. We anticipate that this trend will continue in coming years, with a specific focus on direct-to-consumer genetic testing, cancer diagnostics, and gene editing. On the capital raising side, genomics has seen growing activity from a varied group of investors, including Y Combinator, Illumina, Polaris, and GV, the venture capital arm of Alphabet. These investors have been primarily focused on genetic testing, sequencing hardware and personalised medicine.

While the future of genomics is promising, there are still hurdles that must be overcome for the genomics space to reach its full potential. Firstly, new technologies will need to be developed to facilitate large scale analysis of genes and efficient storing of genomic data. Secondly, insurance plans will need to change the reimbursement landscape and establish a better framework for determining when genetic testing is appropriate. Lastly, the FDA and other regulatory entities will need to draft new guidance on how they plan to regulate genetic testing in an era of increased activity. If these potential hurdles are addressed, we foresee a significant increase in M&A and capital raising activity in the genomic space in coming years.

Predicting an individual’s health has become a key area of focus as healthcare companies attempt to determine and reduce total lifetime healthcare costs for patients.

The most accurate predictors that determine an

individual’s health are medical care, genomics

(the function and mapping of genomes), and

social determinants of health. Whilst only 11%

of an individual’s health is driven by medical

care, we currently spend 60% of our dollars

in medical care, while very little is spent in

genomics and social determinants of health.

Increasing the focus and spend on genomics

will have a significant impact on driving

healthcare costs down as we will be able to

try to predict what is going to happen to an

individual’s health and consequently avoid

expensive hospitalisations. We anticipate

that these benefits will drive M&A and capital

raising activity in coming years.

The impact of genomics on an individual’s

health is 21%, however only 0.3% of total

healthcare spending is currently related to

genomics. This lack of spending is starting to

change as companies that focus on genomics

gain attention from investors and acquirers.

A recent example of the increased attention

genomics has received is 10x Genomics

(NasdaqGS: TXG) and the $390 million it

raised in its Nasdaq IPO this September. 10x

Genomics, a lab equipment manufacturer that

allows users to observe gene expression on an

individual cell basis, has grown rapidly, more

than doubling its 2017 revenue to reach $146

million in revenue in 2018. In its first day of

trading, 10x Genomics’ stock price increased

by 48% to $57.80, a sign that investors are

starting to see the value of genomics based

companies.

“Living in a world where a

genome can be sequenced

for $100 is a future

companies are increasingly

preparing for...”

10x Genomics will create positive competitive

tension for more established genomics

companies like Illumina (NasdaqGS: ILMN).

When Illumina introduced its first DNA

sequencing machines in 2006, the cost

to decode an entire human genome was

$300,000. More recent Illumina sequencing

machines can sequence a full human genome

for $1,000, and Illumina hopes to be able to

bring the cost down to $100 in coming years.

A $100 genome has the potential to create

an overwhelming amount of data, so it will be

important for there to be an entire ecosystem

of genomics companies to process all of this

information.

Pierre-Georges RoyE pgroy@resultsig.com

Van Hamilton BarbeauE vbarbeau@resultsig.com

20

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“Increasing the focus and

spend on genomics will

have a significant impact

on driving healthcare

costs down...”

We were delighted to have partnered with The Drum for this year’s Agency Acceleration Day APAC in Singapore. Our North Asia Partner Chris Beaumont, shares his key insights, on the scaling challenges for businesses in APAC, what makes agencies in the region attractive, and key industry trends.

Globally, agency networks are in a transition

period, where traditional players are looking to

change legacy structures and legacy thinking to

become more agile and provide a better, more

personalised service to its clients.

To achieve this in the smaller and hugely diverse

markets across APAC, holding companies

are reducing complexity, doing away with

unnecessary regional levels of management,

and focussing on local knowledge and a

physical presence to meet clients’ needs and

respond to changes in their local markets.

As a result, local agencies are increasingly

becoming particularly attractive acquisition

targets for large networks who are often up

against more nimble competitors.

Redder Asia for example, a leading integrated

Creative, Digital and PR agency in Vietnam,

was acquired by Dentsu in April this year. Its

primary draw was that it’s a “dynamic local

agency with strong creative & digital capabilities

which support [Dentsu’s] ambition to build new

local and international client relationships”, said

Sanjay Bhasin, CEO of Dentsu Aegis Network

Indochina. Results International advised

Redder Asia on this transaction.

Other key themes from the day:

• Technology and increasingly digitally driven

consumers, are propelling the level of

creativity demanded of marketing agencies

• Coined ‘Imagineering’; agencies are tasked

with finding new ways to delight the consumer

with enhanced personal experiences

• eCommerce is rapidly growing as a

competitive space for brands and a new

channel for marketing and advertising but

there is a concern that brand communications

could become too transactional

• Concerns of fragmentation and the need for

coherent brand messages remain crucial,

but again technology helps to provide

a holistic narrative that can be managed

anywhere on the customer journey

With so much optimism in the region and

greater brand bandwidth for new technologies,

such as extended reality, the outlook in APAC is

extremely positive.

www.resultsig.com

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21

AGENCY ACCELERATION DAY, APAC: MANY REASONS TO BE OPTIMISTIC

Chris BeaumontE cbeaumont@resultsig.com

has been acquired by

22

OUTSOURCED MANUFACTURING 2020: CURRENT TRENDS & FUTURE PROSPECTS

........................................................................................

In our latest white paper, we predict the total commercial and clinical contract manufacturing market to grow by c. 6.8% CAGR to c. $117bn in 2023, with certain sub-sectors such as viral vector and pre-filled syringe manufacturing achieving significant double-digit growth. We thus view the CDMO sector to be in robust health with significant potential for future value creation, which is underlined by record valuations both in the M&A and public markets.

Over the past couple of decades, there has been a significant trend among pharma companies to increase the amount of discovery, development and manufacturing work that they outsource. It can be an effective way of reducing capital costs, and gaining access to capacity and capabilities that are not available in-house.

Download your copy at resultshealthcare.com/insights

“Continued strong growth is anticipated in the CDMO market, mirroring growth in the underlying pharma market, as well as the increasing drive towards outsourcing.”Kevin Bottomley, Partner, Results Healthcare

www.resultsig.com

MEET THE TEAMEUROPE

NORTH AMERICA

ASIA-PACIFIC & MENA

Keith HuntManaging Partner

Maurice WatkinsPartner

27 Soho Square, London, W1D 3AY Tel: +44 20 7629 7575

80 Broad Street, Suite 3203, New York, NY 10004 Tel: +1 646 747 6500

5 Shenton Way #10-01, UIC Building, Singapore 068808Tel: +65 6932 2768

Andrew KeffordPartner

Julie LangleyPartner

Pierre-Georges RoyPartner

Part of a global team of 55+ employees across offices in London, New York and Singapore.

Chris BeaumontPartner

Imad KublawiPartner

Mark WilliamsManaging Director

David SandersManaging Director

Kevin BottomleyPartner

Jason FossManaging Director

Sunil GuptaPartner

Eduardo SteinerPartner

Chris LewisPartner

Paul Georges-PicotDirector

Annabelle GuillermoDirector

Issac JacobDirector

www.resultsig.com

Results International Group LLP is Authorised and Regulated by the Financial Conduct Authority. This document is intended for use by professional clients only.

23

James KesnerDirector

Kunal KadiwarDirector

Richard LatnerDirector

James WestDirector

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