Broadly speaking, there are three ways to sell your business:
- An individual investor may want to buy themselves a job by acquiring your company.
- A financial buyer may see your company as an attractive source of future cash flow.
- A strategic buyer may view your business as a key piece in the puzzle they are trying to complete.
This week we published an interview with Aaron Leibtag, who provides an illustrative case study of a strategic acquisition.
Aaron co-founded Pentavere Research Group, which used an Artificial Intelligence (AI) engine to help identify patients not receiving medications or interventions they should, based on their health data. Pentavere’s model, validated and praised by prestigious medical journals, caught the attention of HealWELL AI, a spin-off of the medical giant WELL Health.
HealWELL stood to benefit from Pentavere’s industry-validated model. In contrast, Pentavere gained from HealWELL’s unique relationship with WELL Health, which owns various medical records companies and has proprietary access to data. This access to millions of patient records was the raw material Pentavere needed to make their algorithm hum, making the partnership sensible for both parties.
As often happens in strategic acquisitions, HealWELL paid a significant premium to acquire Pentavere. Despite having just 15 employees, Pentavere was valued by HealWELL at an impressive $15 million.
📽️ Clip of the Week
In this clip, Aaron Leibtag shares how he got his acquirer to focus on future potential rather than historical EBITDA.
📣 Quote of the Week
“We’re all working towards that full dining room set. You may be two chairs short, we have those two chairs, but if we can bring it together, look at the value that we can create.”
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– Aaron Leibtag describes the strategic rationale for HealWELL AI to acquire Pentavere
📈 Deals
- Vian Enterprises, Inc., known for designing and manufacturing specialized lubrication pumps and system components for aerospace and defense, has been acquired by Crane Company. Crane Company, which primarily provides various industrial products and solutions, acquired Vian for about $103 million. As of August 2023, Vian’s sales over the past 12 months were around $33 million, with an adjusted EBITDA of $8 million. This suggests Crane valued Vian at more than three times its revenue or about 12.5 times its EBITDA.
Watch the full interview with Aaron Leibtag.
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