Synergy Validation and Risk Mitigation for a $120M Healthcare Carve-Out
The Client: A middle-market Private Equity firm acquiring a medical logistics division from a large healthcare conglomerate.
The Problem: The PE firm needed to validate the seller's claim of $5M in potential cost synergies. They were also concerned about the operational complexity of separating the division's entangled IT systems from the parent company without disrupting service to its 60+ hospital clients.
Our Action: Potomac Insights was engaged to perform a rapid, deep-dive analysis.
Conducted a series of targeted workshops with the target's IT and operations leads to map system interdependencies.
Built a standalone cost model from the ground up, identifying hardware, software, and personnel costs required to run the business independently.
Performed a risk assessment on the draft Transition Services Agreement (TSA), identifying three critical, uncovered service gaps.
The Result: Our analysis revealed that the true, achievable synergies were closer to $3.5M, a finding that allowed our client to successfully renegotiate the purchase price. Furthermore, the identified TSA gaps were closed, preventing an estimated $500k in potential Day 1 remediation costs and minimizing operational disruption at close.
Strategic Divestiture: Uncovering $50 Million in Value for an Aerospace & Defense Carve-Out
The Client: A global Aerospace & Defense corporation planning to divest a non-core manufacturing division.
The Problem: The A&D parent company needed to prepare the division for sale. To command a premium valuation and negotiate from a position of strength, they required a clear, independent, and defensible assessment of the division's true standalone operating costs. Without this clarity, they risked undervaluing the asset, prolonging negotiations with potential buyers, and creating complex, dispute-prone Transition Service Agreements.
Our Action: We were engaged to conduct a comprehensive standalone cost and interdependency analysis for the carve-out. The process involved:
An analysis across major functional areas of the division, including IT, HR, Marketing, and Operations, to identify costs currently absorbed by the parent company.
Facilitating a series of C-suite level workshops to map critical business processes and the technological systems that supported them.
Building a detailed, bottom-up standalone financial model to serve as the "single source of truth" for the division's operational expenses.
Identifying specific cost-saving and synergy opportunities that would be available to a potential strategic buyer.
The Result: The analysis provided the client with critical strategic and financial leverage. Our standalone cost model became the foundation for their valuation and marketing materials. Crucially, we identified approximately $50 million in actionable cost savings and potential synergies a buyer could realize.
This allowed our client to demand a higher purchase price and exceed their initial valuation targets. Furthermore, the detailed interdependency report enabled them to draft clear and concise TSAs, dramatically reducing the risk of post-close operational disruptions and disputes.