Enabling deal value and future growth for a Canadian healthcare provider

A private equity-owned portfolio company in healthcare was preparing for sale within 12 months, but its aging core IT systems and infrastructure—and the operational and growth constraints it posed—were impacting its business potential and future strategic plans. By undertaking a rapid IT assessment and execution of recommended optimizations in IT, our client was able to prove the organization’s growth plans shared with buyers and protect significant deal value.

The healthcare service provider had an aging core information management system, including a custom-built legacy system from the 90’s that was causing scalability challenges, reliability risks, and operational limitations. They were faced with a proposed investment of a $100 million to replace the system and embark on a digital transformation program that could considerably affect the potential value of the planned sale. At this critical point, the healthcare service provider enlisted KPMG in Canada’s Operations Mergers & Acquisitions team.

KPMG's team's mandate was to quickly assess the state of their technology environment to explore modernization options to maximize long-term value and shot-term stability improvements while preparing for the sale.

Our team conducted a rapid digital maturity assessment by evaluating the organization's current digital landscape, business strategy, and industry IT maturity insights. We reviewed the state of their existing technology, identified potential strategies to help leadership make informed investment decisions for IT modernization, and recommended opportunities for further improvements.

As part of this, the project team helped in analyzing the company’s digital strategy decision-making processes to ensure there was full alignment with the strategic business goals aiming to preserve EBITDA in preparation for the sale. Once the IT review was completed and the resulting potential solutions were assessed, KPMG recommended short-term fixes that could be executed within six months, extending the system's life by five years.

The team also delivered a rapid digital improvements roadmap with prioritized areas of opportunity. It featured targeted recommendations for deploying and overseeing IT optimizations throughout the organization with a focus on infrastructure hosting, security, and IT architecture improvements. All implemented within a short period of time and at a much lower investment than the initially estimated $100 million cost.

These recommended solutions were cost-effective and provided a solid growth and value story for potential buyers.

By leveraging our Rapid IT Maturity Assessment and Digital Value Creation strategies, we were able to quickly determine viable solutions to achieve the company’s business objectives.  In fact, the IT optimizations we helped implement enabled our client to protect more than $40 million of deal value.

Additionally, the suggested digital roadmap presented the potential for an additional $10 million in value creation through their already optimized IT environment, amounting to a total of $50 million of unlocked value.

The healthcare service provider’s transformation isn’t just a story of preparing for sale, but also a testament to the power of digital optimizations in creating new opportunities and additional value for businesses.

Contact the KPMG team to discuss your business objectives and how our network of transactions and transformations specialists can support your organization.