Emendo Limited, a Christchurch health services software firm, was established in 2002 to improve operational performance and patient care in hospitals. Emendo developed CapPlan, a system that forecasts future patient activity and helps health systems
to allocate resources efficiently while identifying unnecessary costs. Realising CapPlan’s potential, technology entrepreneurs Dave Tinkler and Phil Holliday of Holliday Corporation invested in Emendo in 2005 and then they became more deeply involved taking on the roles of CEO and CFO respectively.
Towards the end of 2011, Emendo was achieving strong growth with its CapPlan solution being used in hospitals in New Zealand, Australia, Britain and Canada so the Board decided to focus on expanding into the US market. It was aware that there was a big risk and there was a need to raise quite a lot of capital.
“Initially we tried to raise the capital ourselves but it proved incredibly time consuming and the approach was rather haphazard because we were trying to run a business at the same time. Phil and I were aware of Howard & Company and the great work Ant Howard and John Quirk had done so we approached them to see if they could help us raise capital and manage the process,” said Dave Tinkler, CEO of Emendo.
Ant Howard, Director at Howard & Company, said they were impressed with Emendo right from the beginning, “It was a high growth software company doing innovative things in the medical industry and wanting an international presence –so it fitted our target client profile. We were excited about what it was hoping to achieve and wanted to help it add value.”
Taking Emendo to the next level…
Howard & Company initially set about preparing an information memorandum to raise capital and manage the process. The team looked at a range of industry participants including industry investors who might be interested in having a minority stake in Emendo and had a gap to fill in their portfolio. They helped introduce Emendo’s investment plans to three US companies who ended up being more interested in acquisition than providing a capital injection. In November 2012 – after lengthy discussions – the Emendo Board decided to sell the company to McKesson Corporation, a United States Fortune 500 company specialising in pharmaceutical distribution and healthcare information technology.
According to Ant Howard the sale was a win-win for both parties “McKesson were interested in Emendo because it provided a product which filled a gap in what it had to offer. For Emendo, it fitted a strategic need in terms of growing its CapPlan Predictive Capacity Planning solution throughout the US.”
Service that’s above and beyond…
Once McKesson was intent on acquiring Emendo Ltd, Howard & Company Associate Director Michael Cheyne provided excellent guidance when required during the sale negotiation process, making sure the Emendo team was well prepared during contract negotiations.
The McKesson due diligence team was made up of 53 people and 13 lawyers– at that point Emendo had only 25 staff.
“The negotiation process was very torturous and long winded,” said Dave Tinkler. “Michael, Ant and the team were unfazed by the intensity of work involved which included an 800line spreadsheet document. They were really competent at taking the lead, when required, providing us with lots of guidance during what can only be described as a huge process of due diligence, Additionally they were incredibly effective negotiating post due diligence terms and conditions”.
He said Howard & Company that more than anything proved to be an excellent sounding board for the Emendo Board.
“Ultimately, they were extremely committed to fulfilling our needs and ensuring that we got what we wanted from the sale process, guiding us through every stage of it with tight, professional engagement. They also provided the right legal advice. Ant & Michael introduced their legal partner Wayne Hudson who acted for us during the deal – he was really valuable as he had strong experience in acquisition sales.”
Providing the keys to success…
The outcome has been successful for both parties. McKesson was already firmly established in the US so Emendo didn’t have to set up infrastructure there and McKesson didn’t have to build a product. Since the acquisition, Emendo has added 12 new people to its New Zealand based team and Mckesson has cracked the US market with Emendo’s product. Dave Tinkler says it would have taken Emendo three years to achieve what McKesson has managed to do in six months.
“I can’t speak highly enough of the team at Howard & Company – they were hands on when they needed to be but not too prescriptive – when we needed help it was there. It was a relationship based on mutual trust – we felt very comfortable in their presence and never felt that we couldn’t say something or ask for their opinion on some matter. They were invaluable to us on so many levels and we wouldn’t hesitate to recommend them to other NZ businesses wanting to grow on the international stage.”