Investment company Concorde Capital almost two years looking for a buyer for the chain of clinics “Dobrobut”. In the end I decided to buy a promising business itself.
In August 2014 Concorde Capital along with the owner of the network of shops “Luxoptica” Oleg Kalashnikov bought the Demchak 80% “Dobrobuta”. The new owners have roughly equal shares in the network, the former owner down to 20%. According to the President of clinic “Boris” Michael Radutsky, fair price “Dobrobuta” is $16-18 million Demchak this assessment considers adequate, however, the cost of sale does not specify. Despite the fact that in time of peace for the network of clinics gave $25-30 million, a deal the seller is happy. “Today, the value of cash in Ukraine is much more than a year or two ago, says Demchak. – Having $1 to buy something earlier, before the crisis, was sold for $2-2,5”. Radutsky says that Concorde has acquired a great asset – a company with a strong network and streamlined business processes. The company’s network consists of seven medical institutions in Kiev and one in Donetsk, offering a wide range of services: polyclinic services, hospital, emergency care for adults and children. The monthly clinics assist an average of 20,000 patients.
What prompted investment intermediary to learn medicine?
History of the clinic “Dobrobut” began in 2001, when Demchak decided to create on the basis of the insurance company a medical center in Kiev. “It seemed to me that it is beneficial, as insurance clients will be served in affiliated clinic,” he recalls.
But a year later, it became clear that businesses must develop independently. Originally Demchak, being a financier in the spirit, not paid due attention to the new direction. But in 2006, amid growing market of private medical network “Dobrobut” has started to show a profit. Revenue increased annually by 20-25%. At the end of 2013, the revenue of ZAO “Medical center “Dobrobut” made 98,31 million.
In the summer of 2012 Demchak was hired by Concorde Capital consultant to attract investment.
Plans “Dobrobuta” was the expansion of business in Kiev began construction of a new building with an area of 9000 sq. m.
For these purposes required a $20 million “From “Dobrobuta” was a clear requirement and good business plan. So we took over the project,” explains the CEO of Concorde Capital Igor Mazepa.
Ready to attract foreign investors, Concorde had organized a thorough network test – auditors of specialized Austrian companies evaluated the level of medical equipment, specialists and treatment, attitude towards customers. Their findings satisfied the Concorde.
After the audit, the consultants sent out invitations to all who hypothetically could be interested in the transaction. Among the first responded to the proposal funds Advent International, Russia Partners, Blackstone.
In Concorde co-investors attracted Kalashnikov, who owns shares in a network “Luxoptica”. In the investment company called long-time friend. The businessman said that to participate in the transaction, he was invited personally Mazeppa. The offer seemed so tempting Kalashnikov, he agreed after a couple of weeks of discussions and even audit “Dobrobuta” are carried out – have relied on the insights of investment bankers.
About the price the parties agreed rather quickly. The company did not include in the structure of the transaction construction project (the one that Demchak at the time sought $20 million). “We’re not very confident in this project, we believe that in its design there were several errors, as well as questions and calls its location”, says Ivanyuk.
But even the lower price the vendor was satisfied. Disagreements arose over the distribution of risks and responsibilities. Demchak wanted to keep the impact on the clinic and to prevent the blur of its share. Concorde was afraid of skeletons in the closet related to the liquidation of the business Demchak. “At the stage of formation of the contract we held 15-20 meetings, says Demchak. – Some of the negotiations lasted longer than a day”.
The agreement was signed in February 2014. Originally bought 40% of the clinic Concorde and Kalashnikov were on a quarterly basis to increase its share throughout the year. But when another tranche on 1 August, they decided to speed up the process. “We have been more profitable to prematurely close the deal. In this case we have operational control over the company and may too early to start the phase of active development, and improve its operational efficiency,” explains Ivanyuk.
For the company Mazepa investment in “welfare” – long-term. According Ivanyuk, a stake in the network, the Concorde is not going to sell in the next few years, although interesting proposals to consider not refuse.
Demchak has already spent part of the money raised from the sale to the payment of large burnt-out to depositors of ERDE Bank. He explained his personal position. Despite setbacks in financial markets, the businessman intends to continue to work for them: he looks at the undervalued banks and insurance companies.