What do you need to buy the right goals, manage integrations, ensure that commercial, operations and customer relationships are not harmful and not harmful?
Mark Peters, BlueSight's CFO, I have a lot of advice from recent experience. BlueSight, a hospital pharmacy and health systems software provider, has purchased three companies over the past 15 months and has deployed audit management, compliance and drug analytics assets.
In an interview, Peters shares what M&A targets wear suits on blue tarps. He also details the Virginia-based Alexandria-based company's systematic approach, ensuring that acquisition meets financial expectations.
As M&A activities play a major role in shaping the healthcare landscape, what strategic considerations do you prioritize when assessing potential targets?
M&A needs to accelerate the core strengths of the company rather than diverting its focus. I adhere to the “Goals from the Core” philosophy and expand from the most powerful capabilities of a company, rather than overexpanding into unfamiliar territory. Prioritize three important factors before acquisition.
One: Core fit and expansion possibilities. Will this acquisition strengthen our core business, improve customer value, or expand adjacent spaces that already have a competitive advantage? If the acquisition is at risk of diluting the core focus, we will reconsider it.
2: Financial and competitive durability. Consider customer retention and margin sustainability and assess revenue quality. Can targets promote long-term profitability?
3: feasibility and cultural fit of integration. Even the best acquisitions can fail if they are too difficult to integrate. We focus on operational and cultural alignment to ensure a less turbulent combination. Cultural influences should not be overlooked. It's important to “put people on the boat.”
With BlueSight's January 2025 purchase of Tampanas, we have ensured that we complement our core focus, strengthen our hospital and pharmacy businesses, ensure we adjust our buyer profiles, and expand our wallet share without diverting resources to unrelated ventures. The disciplined approach focuses on providing new solutions to solve and focus on further innovation in healthcare technology [client] Problem.
What is the most effective strategy for ensuring financial and operational integrity after an acquisition? Can I share an example?
After getting it, I divide the key goals into workstreams and make them very clear about the workstream owner, timeline, budget and end goals. Every acquisition has a paper. It is the rationale behind its strategic fit. It could be market expansion, strengthening core competency, synergistic costs, reducing market disruption, or a combination of these factors.
Financially, it's important to do three things.
- Save the retrieved base. We work to understand their situation and needs and try to meet customers who are meeting the customers they have. This starts with assessing risk and documenting all agreements to prioritize renewal, expansion and migration over priority terms. Very often, in companies that have been acquired, customer retention was not focused on that. We can create value by making it a priority.
- Strengthen your entire customer base. Once you stabilize your acquired base, the next step is to identify cross-sell and upsell opportunities across the new combined suite of customer bases and solutions. It is recommended that you set up a matrix to identify opportunities.
- Stick to the timeline of financial integration. Consolidate your financial system as quickly as possible (bring it in to support third parties if necessary) and pay special attention to your collection efforts. If possible, coordinate the processes of each organization and quickly integrate the efforts of its accounting and finance teams.
How's it operational?
Build a playbook for operational integration. Standardize reports, coordinate KPIs, reduce redundant services and software spending, and focus on system integration in financial systems, CRM and customer engagement platforms in particular.
We are also working to maintain the continuity of our customers and culture. We engage employees and customers early and strengthen our commitment to continuity and long-term value creation.
Recent acquisition integrations have encountered inconsistent customer contract structures, threatening financial and operational efficiency. Instead of trying out a disruptive overhaul, we implemented a step-by-step integration and maintained our existing structures while gradually moving towards an integrated model. This allowed us to gain long-term synergy and protect our core revenue base while minimizing customer relationships.
What role does CFO play in coordinating customer needs with long-term retention and acquisitions?
M&As need to enhance the customer experience, not just the balance sheet. As CFO, my role goes beyond financial due diligence and ensures that acquisitions strengthen our core value proposals. This means prioritizing the synergy of core customers. This is about assessing whether an acquisition really adds value to its customers, rather than causing complexity or disruption.
It also builds transactions for sustainable growth, functional, pricing model contracts, and services integration to enhance long-term customer retention.
Finally, a smooth transition is important. Finance works closely with products, customer success and sales teams to prevent integration from destroying service levels. One of our core values is honouring our customers, and that principle is important for our integration strategies when pursuing new M&A opportunities.
