samplecompany - joorney advisory · for breast augmentation and is recognized as a leading expert...
TRANSCRIPT
INFORMATION MEMORANDUM
Sample Date 20XX
SAMPLECOMPANY
2
DISCLAIMER
This Memorandum has been prepared by AdvisorCo in relation to the proposed opportunity in TopCo.
The company is a cosmetic surgery practice located in SomeCity.
The delivery of this Memorandum does not constitute an offer in any jurisdiction to any person to whom
such an offer would be unlawful in such jurisdiction. We have not authorized any person to provide any
information or to make any representations except to the extent contained in this Memorandum. If any
such representations are given or made, such information and representations must not be relied upon
as having been authorized by us. This Memorandum is not an offer to sell or subscribe, nor is it seeking
an offer to buy shares, in any jurisdiction where the offer or sale is not permitted.
Prior to making any investment decision, you should determine, without reliance upon Viper, the
economic risks and merits, as well as the status of legal, tax and accounting matters pertaining to the
Company and determine whether the high-risk nature of any investment is acceptable to you. This
document contains forward-looking statements and financial and other projections that are subject to
risk and uncertainty that could cause the actual results to differ from those projected, including but not
limited to price fluctuations, environmental risks, physical risks, legislative and regulatory changes,
political risks, project delay or advancement, ability to meet additional funding requirements, factors
relating to title to properties, native title, dependence on key personnel, approvals and cost estimates.
By accepting this Memorandum, the recipient agrees to keep confidential the information contained
herein whether pursuant to any confidentiality agreement executed by the recipient or otherwise. By
accepting this Memorandum, the recipient acknowledges and agrees that: 1) Viper will not be subject to
any liability based on the information contained in the Presentation, errors therein or omissions
therefrom, whether or not Viper knew or should have known of any such errors or omissions, or was
responsible for or participated in its inclusion in or omission from this document; 2) the recipient will not
copy, reproduce or distribute to any third party this Memorandum in whole or in part; and 3) any
proposed actions by the recipient which are inconsistent in any manner with the foregoing will require
the prior written consent of Viper.
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CONTENTS 1. Introduction ............................................................................................................................................. 4
2. Business Information ............................................................................................................................... 4
2.1. Milestones ......................................................................................................................................... 5
2.2. Products and Services ....................................................................................................................... 6
2.3. Competitive Advantages ................................................................................................................... 7
3. Market Context – Plastic Surgeons in the U.S. ......................................................................................... 8
3.1. Industry Snapshot ............................................................................................................................. 8
3.2. Products and Services ....................................................................................................................... 9
3.3. Demand Determinants .................................................................................................................... 10
3.4. Competitive Landscape ................................................................................................................... 11
3.4.1. Major Markets.......................................................................................................................... 11
3.4.2. Market Share Concentration .................................................................................................... 12
3.4.3. Basis of Competition ................................................................................................................ 13
3.5. Local Market and Competition Analysis.......................................................................................... 14
3.5.1. Some County, NY ...................................................................................................................... 14
3.6. Cost Structure Benchmarks ............................................................................................................. 15
3.7. Key Success Factors ......................................................................................................................... 16
4. Management and Team ......................................................................................................................... 17
5. Opportunity ............................................................................................................................................ 18
6. Financials ................................................................................................................................................ 19
7. Conclusion .............................................................................................................................................. 20
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1. INTRODUCTION SomeDoctor is a celebrity double board certified cosmetic surgeon renowned worldwide as an authority
in the field. His practice includes two office locations in SomeCity, NY and Montvale, NJ; both in proximity
to each other.
Over the last 20 years as a highly experienced surgeon, SomeDoctor has performed more than 10,000
surgeries for his patients and yet his desire to constantly improve and learn new techniques and
procedures continues to this day. One of SomeDoctor’s advantages is that he always stays on the cutting
edge of new technology, which is important in this highly competitive industry. His expertise is at such an
advanced level that he not only performs various injectables procedures and breast implants but is an
actual appointed trainer to other surgeons in such procedures. Furthermore, as a true expert in his field,
SomeDoctor’s valued professional opinion is highly sought after by the media where he has made
numerous appearances on both national television and print media. SomeDoctor has a team of 10 who
help ensure the business operates smoothly.
The business has produced strong results from 2016-2017 with total gross profit figures increasing from
$XX million to $XX million — representing a 20% increase. Adjusted EBITDA margins in the same time
frame increased a robust XX% YoY; a very strong result for a practice that has been in business for over 30
years.
SomeDoctor is now seeking a full sale of his business while continuing as the Practice’s Chief Medical
Officer.
2. BUSINESS INFORMATION The Practice is comprised of two separate legal entities, “XYZ MD PC” which is an S-Corp and “ABC, LLC”
which is registered as a New York Public Health Law Article 28 Ambulatory Surgery Center. The office is
located at SomeAddress and the hours are Monday through Friday from 9am to 5pm (by appointments,
which can be made by phone). The building where the office is housed is owned by “DEF LLC” which is an
entity wholly owned by SomeDoctor.
The location houses a MedSpa to treat cellulite, wrinkles, stretch marks, problem fat areas, and much
more. Additionally, SomeCompanyB pays rent to operate a vascular surgery group that functions within
the location’s surgery center. All procedures, both surgical and non-surgical, can be performed under one
roof.
Zoomed out view of the location Zoomed in view of the location
XYZ MD PC
XYZ MD PC
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Exterior of the location Some Doctors office
The total size of the location is 10,000 square feet. For reference, the Practice is location approximately
XX miles from Manhattan, NY. The practice’s website is: https://SomeWebsite and its homepage is shown
below:
2.1. MILESTONES SomeDoctor’s practice has had several notable milestones as follows:
2018 marks the 30th year in practice
Recently progressed from a single specialty to a multi-disciplinary practice for the surgery center
2016 and 2017 – SomeDoctor was awarded the Castle Connolly Top Doctors Award, a very well reputed and trusted source for identifying the top doctors in the U.S.1
1 Castle Connolly Nomination Process: All licensed physicians, MDs and DOs (Doctor of Osteopathic Medicine) are invited to participate in this
online process, which is found at www.castleconnolly.com/nominations. This involves contacting directly more than 50,000 physicians and hospital and healthcare executives, a nationwide distribution of nomination notifications via various media channels.
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2.2. PRODUCTS AND SERVICES SomeDoctor’s practice offers patients a number of surgical and non-surgical procedures for the body,
breasts, and face. The specific services offered are as follows:
BODY BREAST
Brachioplasty Breast Augmentation
Brazilian Butt Lift Breast Augmentation with lift
Labiaplasty Breast Reconstruction
Liposuction Breast Reduction
Medial Thigh Lift
Mommy Makeover
Puregraft Fat Transfer
Vein and Vascular Treatments
Tripollar
Breast Lift
SomeTechnique Breast Implants
Gynecomastia
FACE CoolSculpting | Dual CoolSculpting
Blepharoplasty MedSpa Services
Chin Surgery
Face Lift
Laser Resurfacing
Lip Enhancement
Neck Lift
Rhinoplasty
Injectables: Belotero, Botox, Dermapen, Dysport, Juvederm, Radiesse, Restalyne, Revanesse Versa, Voluma, Xeomin
SomeDoctor stays on the cutting edge of modern techniques and technology — most notably with his
expertise in “SomeTechnique” breast implants. SomeTechnique implants are the fifth generation in
silicone breast implants and are changing the way breast enhancements look and feel in the best possible
way. Their unique feel comes from a high-strength, form-stable silicone gel that is the most cohesive ever
made available. SomeDoctor trained in SomeCountry on the intricacies of using SomeTechnique implants
for breast augmentation and is recognized as a leading expert in SomeTechnique breast implants in
SomeCity, NY. Due to his talent and knowledge in this new type of implant, he was selected by the
creators of SomeTechniques to train other plastic surgeons all across the country.
Lastly, a variety of noninvasive services — including TriPollar and Coolsculpting — are performed at the
practice’s MedSpa.
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2.3. COMPETITIVE ADVANTAGES SomeDoctor has built a practice that has several competitive advantages that well-positions it to continue
its ongoing success.
Location and Office – Based approximately XX miles from Manhattan in SomeCity, NY, the practice is well
situated in Some County — where the population has an above-average median annual per capita and
household income relative to the state and the country.
The office is essentially a “one-stop-shop” with a state-certified surgery room, office, and MedSpa all
under one roof. This is uncommon in most practices, which typically have multiple locations for different
procedures/patient objectives. The one-stop-shop approach is a great convenience benefit to all patients
and prospective patients.
SomeDoctor’s office is also the only area practice that has 2 CoolSculpting machines which, when used
simultaneously, reduces procedure time by 50%.
Expertise – SomeDoctor is a double board certified plastic surgeon with experience spanning three
decades and thousands of successful surgeries specializing in breast and body procedures. His
numerous professional certifications, awards, and associations are outlined in Section 4 of this
document. Being at the forefront of the popular SomeTechnique breast implant procedure in the U.S.,
SomeDoctor is one of only four surgeons in the U.S. that SomeIndustryCo has appointed to provide
training for the procedure. Additionally, he also trains other surgeons to perform procedures that use
Dysport (wrinkle treatment), Perlane, and Radiesse (dermal fillers).
Oftentimes, patients who are unhappy with prior procedures performed by other plastic surgeons come
to SomeDoctor to “revise” these prior procedures.
Reputation – SomeDoctor’s practice has a very good reputation, with 24 reviews at an average of 4.5/5.0
stars on Yelp and 17 reviews at an average of 4.8 stars on Google Maps.
Staff – Many doctors’ and cosmetic surgeons’ practices suffer from non-responsive office staff when it
comes to taking care of patients and potential patient’s scheduling and appointment needs.
SomeDoctor’s staff of 10 is a true strength of his practice. This is evidenced by the numerous testimonials
on Yelp and Google Maps that not only praised SomeDoctor for expertly performing procedures but also
praised the welcoming, knowledgeable, and friendly staff.
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3. MARKET CONTEXT – PLASTIC SURGEONS IN THE U.S.
3.1. INDUSTRY SNAPSHOT This industry provides medical techniques intended to enhance the physical appearance for cosmetic or reconstructive purposes. Companies consist of medical specialist clinics where licensed professional doctors perform surgical and non-surgical procedures.
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3.2. PRODUCTS AND SERVICES
The Plastic Surgeons industry provides products and services in two broad segments: surgical and nonsurgical procedures. . Injectables Laser hair removal
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Microdermabrasion . Chemical peels Breast augmentations and reductions Liposuction and other surgeries
3.3. DEMAND DETERMINANTS Demand for the Plastic Surgeons Industry hinges on several key factors. Demographics
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External competition Technological change .
3.4. COMPETITIVE LANDSCAPE
3.4.1. MAJOR MARKETS
Based on data from the American Society for Aesthetic Plastic Surgery (ASAPS), Americans aged 35 to 50
make up the largest market for the Plastic Surgeons Industry.
Patients 18 years old and younger
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Patients ages 19 to 34
Patients ages 35 to 50
Patients ages 51 to 64
Patients 65 years old and over
3.4.2. MARKET SHARE CONCENTRATION
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3.4.3. BASIS OF COMPETITION
Internal competition
External competition
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3.5. LOCAL MARKET AND COMPETITION ANALYSIS
3.5.1. SOME COUNTY, NY New York state accounts for 7.8% of industry establishments, with the state population accounting for 6%
of the total estimated 2017 U.S. population.
SomeWebsite.com states that Some County, NY has a population of 326,780 (2016), and an annual median
household income of $XXX (2016) vs. the New York state median household income of $XXX. The median
per capita income is $XXX vs $XXX2 for New York state. Some County has a population density of 1,876
people per square mile, which is considered “very high”.3
Yelp lists 40 “cosmetic surgeons” in SomeCity and the surrounding area as shown in the map below.4
According to SomeResearchSite, the average cosmetic surgery business in the New York/Northern New
Jersey/Long Island region has annual revenue of $XXX million — which is on par with both New York State
($XXX million) and the U.S. ($XXX million). The national median is $XXX.
Business/Geography Value
SomeDoctor (2017) $ XXX
New York-Northern New Jersey-Long Island $ XXX
New York $ XXX
United States $ XXX
National Median $ XXX
Reference USA lists an industry mean revenue amount of $XXX million and a median revenue amount of
$XXX for the SomeCity and its vicinity (a 15-mile radius).5
2 SomeSite.gov 3 SomeResearchSite.com 4 Not all 40 practices are shown due to Yelp map limitations. However, the ones shown are the first 10 search results.
5 SomeResearchSite2.com
XYZ MD PC
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3.6. COST STRUCTURE BENCHMARKS
Average Cost Structure in the Industry (% of revenue)
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3.7. KEY SUCCESS FACTORS According to SomeResearchSite3, the most important success factors for this industry are:
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4. MANAGEMENT AND TEAM SomeDoctor
In addition to being a double board certified cosmetic surgeon,
SomeDoctor is a distinguished author with numerous
publications on plastic surgery including peer-reviewed medical
articles, books, and textbooks. Highly respected by his clients
and the plastic surgery community, SomeDoctor's expertise has
won him the trust of the thousands of patients whom have
visited his practices in New York and New Jersey since 1988.
With more than 26 years of experience specializing in breast and
body procedures, SomeDoctor is recognized as one of the most
experienced plastic surgeons in his field. Always looking to
improve his technique, he recently traveled to SomeCountry to
be trained by SomeIndustryCo, the creators of the popular SomeTechnique breast implants, on advanced
procedures and best practices for implementing silicone breast implants.
His expertise and thousands of successful surgeries have brought him the honor of being appointed by
SomeIndustryCo to train other doctors in the United States. Due to his renown, SomeDoctor has
performed cosmetic surgery on numerous movie and television stars. He is frequently sought after by
mainstream media outlets and programs for his expert opinion, including Fox News, Good Morning
America, The View, The Doctors, and the Real Housewives of New Jersey.
A native of Some County, having grown up in SomeCity, NY, SomeDoctor graduated from Some High
School in 1983. He went on to finish at the very top of his class at Some Medical School. Afterwards he
completed five years of general surgery at Some University Hospital and became board certified in general
surgery.
Additionally, he is board certified in plastic and reconstructive surgery and was elected President of the
Some County Medical Society where he served from yyy - zzz. In 1994, SomeDoctor opened a surgical
facility with an operating room and MedSpa where his practice remains today.
SomeDoctor currently lives in Bergen County with his wife and their five children. In his downtime, he
enjoys golfing, traveling, exercising, and spending quality time with his family.
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Additional Team
The following team members round out SomeDoctor’s practice to ensure optimal customer service and a
superior overall patient experience.
Office Manager – The Office Manager acts as the point person for cosmetic patients, coordinates
appointments and sales/consultations, and books surgeries.
Secretaries (2) – Each of the two secretaries are responsible for answering the telephone, scheduling
appointments, explanation of services, booking consults, and sales
Medical Assistants (2) – Medical Assistants see the patients alongside the doctor as well as assist with
both surgical and non-surgical procedures
Head Nurse – The Head Nurse is responsible for cooperating the surgery center, ensuring the practice is
compliant with all state regulations, oversees medical safety, and supervises other staff members
Per Diem Nurses (3) – Per Diem Nurses perform routine nursing tasks in the operating room and in the
recovery room.
Billing/Administrator – The Billing/Administrator is responsible for accounting, billing, and record keeping.
5. OPPORTUNITY Capacity – There are currently 4 surgeons who use the center. SomeDoctor performed 700 surgeries in
2017 and is projecting 800-850 surgeries during 2018 with the addition of 2 more surgeons.
Marketing – SomeDoctor has traditionally focused on what he loves the most – performing surgeries to
help patients realize their dreams. As such, the creation and execution of a comprehensive marketing
and advertising campaign remains a great opportunity for a new owner to attract new patients to the
practice as well as follow up with existing patients.
Continuation – SomeDoctor will continue on with the practice as the Chief Medical Officer. This will
ensure that existing and past patients will remain with the practice.
Location/Geography – The current administration’s proposed infrastructure plan includes the
construction of a new tunnel that will provide transportation from New York/New Jersey (where the
practice area is) directly into Midtown. Once completed, this train route will make access to the practice
even easier for all residents of Manhattan. This accessibility, combined with an effective marketing
campaign, will create a whole new avenue of business.
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6. FINANCIALS The following table is the practice’s consolidated historical P&L performance with discretionary add back
items shown:
6Note that SomeDoctor’s practice is split into two entities, however, it is one practice under the same
roof. For clarity, the MDPC entity is where non-surgical procedures, office consultations, and
appointments are booked and the SomeCompany is where surgical procedures are booked.
The added back items shown in the consolidated P&L are comprised of travel and entertainment, D&A,
interest, taxes, mortgage, automobile service, and Associate payroll expense. The Associate payroll
expense was related to an Associate that is no longer with the practice. Each of the other added back
items are typically standard items that are commonly added back as an incoming buyer may choose not
to continue them or have an alternative way of treating them. Therefore, Adjusted EBITDA calculations
are made to provide a clearer view of the business from the perspective of a new owner.
The above table shows the combined revenue increase from approximately $XX million in 2016 to $XX
million in 2017 representing a 17% increase YoY. This was primarily driven by a 57% increase in surgical
procedures performed by SomeDoctor in 2017. Adjusted EBITDA also increased 57% from $XX million in
2016 to $XX million in 2017 while the adjusted EBITDA margin increased from 30% to 40% YoY.
A list of several of the top expenses as a percentage of sales under each entity are shown below:
6 Revenues in 2016 for SomeCompany are estimated and are awaiting confirmation from SomeDoctor's CPA.
XYZ MD PC
ABC, LLC XYZ MD PC
ABC, LLC
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While expenses as a percentage of sales at MDPC remained steady, expenses as a percentage of sales
greatly decreased at the SomeCompany as SomeDoctor performed a much higher number of surgical
procedures in 2017 relative to 2016. In most industries, payroll would nominally increase as sales
increase, however, SomeDoctor’s practice perfectly illustrates a real strength in this industry; surgical
services capacity was underutilized in 2016 and vastly increased in 2017 which resulted in a material
improvement in margin. As mentioned in Section 5, SomeDoctor intends to add 2 additional surgeons
which will bring the number of projected surgeries to 800-850 in 2018 vs. 600 in 2017. An increase in
surgeons combined with a continued focus on efficient capacity utilization is certainly an area of growth.
Additionally, with a relatively small increase of 4% YoY at MDPC; a concerted push into the rapidly growing
segment of non-surgical procedures presents an opportunity for an incoming owner.
7. CONCLUSION We believe that SomeDoctor’s practice is a strong business with robust margins and that is continuing to
grow briskly even after 30 years. The numerous positive patient testimonials online highlight
SomeDoctor’s elite expertise, one-stop-shop, and knowledgeable and comforting staff as the strengths of
the practice. A new owner will enter into a top performing and well-renowned practice in a high and
continued growth industry.
Audited financials for 2016 and 2017 are available upon request. Should you be interested in learning
more about this opportunity, please contact AdvisorCo at SomePhoneNumber.