Deal Analysis: Research Institute Contemplating Acquisition


An established, biomedical research facility was looking to enter into an agreement with a hospital organization which would absorb the research institute in exchange for a commitment to continue funding its scientific efforts into the future.

The research institute had several, discrete business units, combining a mix of research intensive, non-profit units as well as for-profit units related to staffing and clinical research organization (CRO) activities. There was a level of uncertainty as to whether or not the hospital organization would ultimately wish to take stewardship of all units, or if the research institute would be better served spinning out select parts of its business prior to the merger.

A robust understanding of the healthcare industry, as well as the nuances that pertain specifically to the non-profit entities that operate in the sector, was essential to conducting a successful analysis. Teknos’ large breadth of experiences with companies and organizations in the life sciences and health care industries was pivotal in delivering a comprehensive understanding of the situation to our client.

Analysis and Recommendations

In order to develop a comprehensive understanding of the research institutes business, we performed a number of different analyses over the course of our engagement. We began by conducting a site visit to observe the institute’s primary research facility in an effort to better understand the operational capabilities of the existing structure, as well as to learn about the institute from management in a face-to-face manner.

Following the initial site visit, we performed a detailed review of historical financial information which included an examination of individual business units, as well as its consolidated business and financial metrics. Furthermore, we reviewed market research and documentation prepared by the client pertaining to the industry in which each of its business units operates.

Lastly, we examined a financial forecast generated by management of the institute in detail for reasonableness. We utilized this forecast to build a comprehensive discounted cash flow analysis which, when benchmarked against other valuation methodologies, was utilized to develop a range of potential values for the institute in its current organizational structure. In addition, we conducted a number of scenario analyses on the institute’s forecast, testing the impact that changes in a number of key variables could have on its value.


At the conclusion of the engagement Teknos presented a composite analysis of the institute’s historical and projected operations to the management team of both the institute and the potential hospital organization. We provided a comprehensive overview of our work and answered questions regarding the analysis in detail. Our analysis ultimately provided management with a better understanding of the value of their organization, as well as a level of comfort to pursue further engagement with their potential acquiror.

Teknos Associates provides valuation and advisory services for emerging growth companies and their venture capital backers. Clients rely on our financial expertise, knowledge of technology markets, and high standards to deliver relevant and timely valuation reports, opinions, and analyses.

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