Advice from Healthtech Sellers

Corum Group has helped sell more technology, software, and IT companies than any other firm or advisor in history. Recently, Corum held a Tech M&A workshop focused on healthtech, an online event for CEOs and founders that delivered a practical, deal-driven view of how transactions are executed in the sector ‒ from preparation and positioning, through valuation, structuring, and negotiation.

Among the segments presented at the event was a seller’s panel, where Corum clients, all founders or CEOs of healthtech companies, shared their experiences in selling their companies.

Here are some of the insights they provided:

Asked how he prepared to sell his company, Michael Wilson, founder of healthcare software and consulting company Healthcare Information Management, Inc. (HCIM), underscored the importance of getting educated about the M&A process. "I started about four-to-five years ago, trying to get educated,” he said. “I attended a couple of the Corum executive summits to really learn about the process. I wasn't really interested in selling at the time, but I wanted to know about the process." HCIM was later successfully acquired by investment firm Metamora Growth Partners.

Karsten Tieg, CEO of a Norway-based medical technology company Holberg EEG AS, who sold his company to medical device and software maker Natus Medical, pointed to the importance of doing your own thorough due diligence before entering into an M&A process. He put it this way: "It's important to have a proper housecleaning at least six months before entering into a selling process to ensure that you don't have any loose ends or skeletons in the closet. You know you can't bury them deep enough, someone will find them anyway."

Roï Eisenkot, the Associate Director of Bioengineering at UW CoMotion, a collaborative innovation hub at the University of Washington, stressed the importance of all the stakeholders keeping the "why", the reason for entering an M&A process, in mind. Eisenkot managed the transfer and acquisition of the Drug Interaction Database (DIDB), a University of Washington-developed informatics solution for the identification of pharmacokinetic (PK) drug interactions, to drug discovery accelerator Cartara. Pointing to the DIDB deal, he recalled that during the process his team had gotten a good financial offer from another buyer. But he said, “We went back to the reasons why we wanted to do this, and one of them was we recognized it wasn't about money. It was about the impact and the career opportunities for the scientists that have been working in this space at the university. Selling to that buyer would have meant that their career opportunities would have been limited and the DIDB would not exhaust its potential. And so we decided against it."

Andrej Strods, founder and CEO of Latvia-based health IT company Blue Bridge Technologies highlighted the fact that sometimes as the seller you need to take a more active role in negotiations and be the final arbiter between contending factions. He noted that during the M&A process the legal teams on both the seller's and buyer's sides were endlessly debating issues without any resolution. He stressed, "The only players that can make the decisions are us," meaning the seller. He continued, "It only worked when we got together and said alright here are the positions, here are the contradictions, what do we decide? And then we shook hands on what we decided. That's the only way it works." Blue Bridge Technologies was acquired by software investment company Everfield backed by PE firm Aquiline Capital Partners.

M&A deals can bring sellers a variety of benefits ‒ financial independence as well as freedom to pursue other interests. Michael Wilson perhaps said it best. "Life is good afterwards, being rewarded with the fruits of our hard work and what we've done. We've bought a condo on the beach in Florida. But we've also been blessed to start a charitable foundation for rescue animals and to help disadvantaged youth. And I want to continue being a mentor and coach to the next entrepreneurs coming up. So I'm looking forward and excited about that."