Questions and answers
Answers written by the authors, and questions sent in by readers.
From the authors
Frequently asked questions
Common questions about the book and the topics it covers, grouped by theme.
Book Structure
What chapters does the book cover?
The book is organised into four parts. Part I (Foundations) covers what PE does and how healthcare differs from generalist sectors. Part II (The Deal) covers sourcing, diligence, valuation, and financing. Part III (Value Creation) covers operational, commercial, and regulatory levers post-close. Part IV (Exits and Returns) covers timing, strategic vs sponsor-to-sponsor exits, and IRR drivers. The full chapter list is in the book.
Is sample content available before publication?
Yes. This companion site hosts chapter previews and practice quizzes. Registered educators also get the instructor materials once their affiliation is verified. Check the News section for updates on new content.
Fundamentals
What makes healthcare PE distinctive compared to generalist buyout?
Healthcare PE has three structural features that separate it from generalist buyout. First, reimbursement risk: third-party payers (public and private) set prices rather than the market, which shapes unit economics and diligence focus. Second, regulatory complexity: clinical standards, licensure, and corporate-practice-of-medicine rules add friction to ordinary PE playbooks. Third, non-discretionary demand: volume is less cyclical than most consumer or industrial sectors, which changes how risk is priced.
How are healthcare services companies typically valued?
The headline metric is EV/EBITDA, on LTM or forward basis. Adjustments typically cover one-time items, owner compensation add-backs, and pro-forma effects from recent M&A. DCF is used as a cross-check rather than a headline method, and is most useful for high-growth or single-asset situations where multiples are less informative.
Which KPIs matter most when diligencing a medical device business?
Installed base and consumables pull-through, gross margin by product line, sales force productivity, regulatory pipeline status (510(k) vs PMA in the US, MDR in Europe), and reimbursement status in target geographies. The key tension is usually between sticky installed-base revenue and the growth contribution from new placements.
From readers
Questions readers sent in
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