In 2002 Chuck Crumpton started Medpoint to help businesses bring medical devices and pharmaceuticals to market. The company quickly took off after Crumpton landed a prominent blue-chip client.
It was a blessing and a curse.
At one point, the blue-chip customer made up 83% of Medpoint’s revenue. Determined to reduce his customer concentration, Crumpton implemented a clever strategy to minimize his dependency.
The strategy worked as Crumpton successfully reduced his reliance below 50%, allowing him to sell Medpoint in 2020 for around five times EBITDA. In this episode, you’ll learn how to:
Confidential Information Memorandum (CIM): A confidential information memorandum is a document prepared by a company in an effort to solicit indications of interest from potential buyers. The CIM is prepared early on in the sell-side process in conjunction with the seller’s investment banker to provide potential buyers with an overview of the company for pursuing an acquisition. The CIM is designed to put the selling company in the best possible light and provide buyers with a framework for performing preliminary due diligence.
Earn-out: Earnout or earn-out refers to a pricing structure in mergers and acquisitions where the sellers must “earn” part of the purchase price based on the performance of the business following the acquisition.
Due-Diligence: Due diligence is an investigation, audit, or review performed to confirm facts or details of a matter under consideration. In the financial world, due diligence requires an examination of financial records before entering into a proposed transaction with another party.
Letter of Intent (LOI): A letter of intent (LOI) is a document declaring the preliminary commitment of one party to do business with another. The letter outlines the chief terms of a prospective deal. Commonly used in major business transactions, LOIs are similar in content to term sheets. One major difference between the two, though, is that LOIs are presented in letter formats, while term sheets are listicle in nature.
Procurement: Procurement is the act of obtaining or purchasing goods or services, typically for business purposes. Procurement is most commonly associated with businesses because companies need to solicit services or purchase goods, usually on a relatively large scale. It can also include the overall procurement process, which is critically important for companies leading up to their final purchasing decision. Companies can be on both sides of the procurement process as buyers or sellers though here we mainly focus on the side of the soliciting company.
MSA: A master service agreement (MSA) is a contract that settles the general terms of future transactions or agreements. It contains the obligations and expectations of all parties involved in ongoing projects.
Statement of Work (SOW): A Statement of Work, often known as an SOW, is a business agreement that outlines deliverables and project goals. It’s created to keep everyone on the same page about deadlines, scope of work, and project expectations. Creating an SOW helps clients and vendors to stay aligned and reach their project goals together.
Chuck Crumpton is the Founder of Medpoint, LLC, a global consulting firm specializing in all areas of quality assurance, regulatory and clinical affairs.
Medpoint, LLC, with over 185 employees/consultants, serves small, medium, and large medical device and pharmaceutical companies in the US, Europe, Asia, and Latin America. Regarded as subject matter experts, the company offers compliance, pre and post-market solutions in all areas pertaining to FDA and ISO quality/regulatory-related matters.