1. Preparing for Private Equity (or Venture Capital)
India-centric Perspective
Innovations in Healthcare Management & Informatics
Sameer Mehta
Atlas Venturez
Dr Mehta’s Hospitals

2. Combined Perspective of Operator & Investor
 Atlas Venturez advises private equity funds
 Atlas Venturez helps build high-growth (fundable)
companies
 Atlas Venturez advises boards and leadership teams on
preparing and successfully navigating fund placements
 Operating role in tertiary care hospitals
 Dr Mehta’s Hospitals
 Mehta Children’s Hospitals
 Mehta Advanced Day Care Center
Evaluated or
advised over
50 healthcare
transactions

3. Market Reality (India)
• PE Deals 2009 >$3.8 Billion across >232 deals
• Healthcare & Lifesciences
• >8% of total deals
• $328M on 20 deals - 2009 vs $607M on 35 deals – 2008
• Big Dogs: Max India, KMC, Apollo, KIMS (hospitals)
• Stage Split across all PE deals (by volume)
Source: Venture Intelligence 2009 PE Digest

4. Current reality
 Strategic investors and funds are very keen to get hands on well
managed, scalable health-care companies
 Interest across company phases, though most focused on proven-
tech, growth-equity or late-stage companies
---------------------------------------vs-----------------------------------------
 Good prospects have poor scalable growth plans
 Many real estate, premature or ultra-small prospects
 Miscellaneous e.g., trusts, franchise, co-own IP / brand…
 Early stage – not many innovative or robust prospects based on
strong business fundamentals
 Limited understanding of value or cost of organized capital

5. Focus of Today
Mindset, Structure, Lessons
 Am I fundable?
 Is organized funding the answer to our dreams?
 Specific disbursement of fund plans
 Strengthening financials for fair / favored valuations
 What are the full range of investor exits
 Build and agree robust long term growth plan
 Develop a robust reporting system and MIS
 Measure performance versus industry benchmarks across
multiple facets of the business (incl. clinical)
 Ensure management team band-width
 Scalability of business e.g., hub & spoke, add markets
 Don’t boost numbers – you’ll live with consequences
 Do not over-shop or over-expose your growth plans
 Find an advisor with content in healthcare
Mindset
Structure
Caveats

6. Mindset
Am I fundable?
 Intellectual Property (or significant competitive
barriers)
 Scalable
 Reach $50M revenues within 4 – 5 years
 Healthy and sustainable EBITDA and PAT margins
 Substitutable
 Service versus Technology / Products
 Current flavor of the month (investors)

7. Is Organized Funding the answer to our
Dreams?
 Strategic investors and funds are very keen to get hands on
well managed, scalable health-care companies
 Interest across company phases, though most focused on
proven-tech, growth-equity or late-stage companies
---------------------------------------vs------------------------------------
-----
 Good prospects have poor scalable growth plans
 Too many real estate or premature prospects
 Early stage – not many innovative or robust prospects based
on strong business fundamentals
 Operators do not fully understand the value or cost of
organized investor capital (PE funding sounds cool!)

8. Mindset
Specific disbursement of fund plans
 Build a very detailed plan for spending (incl. phasing)
 Account to nearest $5 - 10k
 Consider capital ROI of large ticket specific equipment
 Attempt to build some additional flexibility in draw-down
 Consider aspects that investors do not like e.g., real estate
 Historically folks under predict and run out earlier
 Best Practice: Save 4 – 6 months burn for unpredictability

9. Mindset
Case Study – Investor Exit
 Hospitals Strategic Sale
 HMS IT Provider IP Transfer

10. Focus of Today
Mindset, Structure, Lessons
 Am I fundable?
 Is organized funding the answer to our dreams?
 Specific disbursement of fund plans
 Strengthening financials for fair / favored valuations
 What are the full range of investor exits
 Build and agree robust long term growth plan
 Develop a robust reporting system and MIS
 Measure performance versus industry benchmarks across
multiple facets of the business (incl. clinical)
 Ensure management team band-width
 Scalability of business e.g., hub & spoke, add markets
 Don’t boost numbers – you’ll live with consequences
 Do not over-shop or over-expose your growth plans
 Find an advisor with content in healthcare
Mindset
Structure
Caveats

11. Structure
Case Study – Growth / Business Plans
 What is the difference between?
 We hired a consultant to help me build detailed growth plans
 We hired an investment bank to help build forecasts
 Our CFO or MBA generated our forecasts

12. Structure
Case Study – Growth / Business Plans
 What is the difference between?
 We hired a consultant to help me build detailed growth plans
 We hired an investment bank to help build forecasts
 Our CFO or MBA generated our forecasts
 Best Practice – Department head and leadership team
develops clear long term internal business plans (with
committed milestones) on our vision, advisor / external
body has strengthened the presentation of the plan for
investors

13. Structure
Reporting Systems
 Funds will want detailed performance information regularly
 Build muscle and capability to track and measure financial,
commercial, clinical and operational metrics within MIS
 Management team must understand and be able to defend the
data and rationale behind metrics
 Compare metrics vs previous and industry benchmarks
 Best practice – develop a system with one – two levels deeper
and more frequently versus investor requirements
 Best practice – use monthly and quarterly dashboards

14. Structure
Management Team
 Build bandwidth of the core team
 Chairman, CEO, CFO, critical unit heads
 Funds do not invest in 1 man teams
 Age and breadth of experience of core team
 Validate qualifications and experiences of key staff
 No major skeletons or surprises
 Alignment and incentive structure for key staff
 Some performance based linked to metrics at the LT level
 Best practice – active (advisory) board pre-fund raise

15. Focus of Today
Mindset, Structure, Lessons
 Am I fundable?
 Is organized funding the answer to our dreams?
 Specific disbursement of fund plans
 Strengthening financials for fair / favored valuations
 What are the full range of investor exits
 Build and agree robust long term growth plan
 Develop a robust reporting system and MIS
 Measure performance versus industry benchmarks across
multiple facets of the business (incl. clinical)
 Ensure management team band-width
 Scalability of business e.g., hub & spoke, add markets
 Don’t boost numbers – you’ll live with consequences
 Do not over-shop or over-expose your growth plans
 Find an advisor with content in healthcare
Mindset
Structure
Caveats

16. Caveats
Scaling Model
 Hub and Spoke
 Multi-Location (economies of scale and scope)
 Medical Tourism
 International Markets
 Mobile Platform
 New Markets e.g., Nanotechnology, Education…

17. Caveats
Case Study Numbers
 Case Study India Clinics
 Case Study HMS IT

18. Focus of Today
Mindset, Structure, Lessons
 Am I fundable?
 Is organized funding the answer to our dreams?
 Specific disbursement of fund plans
 Strengthening financials for fair / favored valuations
 What are the full range of investor exits
 Build and agree robust long term growth plan
 Develop a robust reporting system and MIS
 Measure performance versus industry benchmarks across
multiple facets of the business (incl. clinical)
 Ensure management team band-width
 Scalability of business e.g., hub & spoke, add markets
 Don’t boost numbers – you’ll live with consequences
 Do not over-shop or over-expose your growth plans
 Find an advisor with content in healthcare
Mindset
Structure
Caveats

19. Final Thoughts
 Congratulations. We think your company has a great
future - here’s a check for $AB million
 You now work for someone else
 You have just lost a few degrees of operating freedom
 The world changes – build relationships with your investor to
sustain you through uncertainty and rough waters
 Understand their mind-set and way of working (speak to
investor portfolio company leadership teams)
 Have fun – you now have fuel to power your dreams

20. Final Thoughts
 Alliances
 Medical and para-medical education
 Branded healthcare system looking for Indian expansion
 Beta testing new health care informatics systems
 Business
 Seeking investor prospects or support portfolio companies
 Providing new jet engines to your business
 Funding your business aspirations (seed to PE)
 Contact
 sam@atlasventurez.com or sameer@mehtahospitals.com