Companies spend trillions of dollars on acquisitions annually, yet over half of them will end in failure. The challenge for many companies looking to enter a potentially lucrative market is sorting good opportunities from mediocre ones, especially when they’re seeking to enter an unfamiliar industry. A lack of in-house technical and industry expertise to evaluate new technology areas can slow down or scupper deals completely.
Rapid tests, also known as rapid diagnostic tests (RDTs), provide quick results, usually in 20 minutes or less. Our client, a global manufacturer of consumer goods, was considering the acquisition of a startup in this sector. The target was a healthcare-related technology platform for rapid diagnostic tests. We were briefed with helping evaluate the opportunity because the industry was new to our client and secondly, the technology space was evolving rapidly with many new players emerging. Our remit was also to determine whether additional capabilities should be developed to commercialise new products based on this technology.
We assembled a project team comprising four experts with experience in rapid diagnostics. We selected each expert for their expertise in technological, capability, and knowledge of market analysis.
Our two technology experts segmented technological space and assessed competitiveness of the startup’s technology against alternative approaches. The market team estimated potential market demand for a product based on the potential target’s technology, and forecast several P&L scenarios. While our capability team evaluated key features of the startup’s technology, and considered whether additional features would be required to successfully commercialise a product based on this technology.
In just four weeks, we provided final recommendations regarding the acquisition target, including a development timeline and projected P&L forecasts. Our due diligence highlighted the primary significant advantages and disadvantages of the target startup’s technology relative to 300 other technologies.
Our market assessments determined the attractiveness of potential products based on the target startup’s technology, while our capability analysis determined the suitability of rapid diagnostics to our client’s context. Overall, our research and advice allowed the client to scrutinise the startup’s claims and make their go/no-go decision regarding this acquisition opportunity.