As healthcare investors face tougher scrutiny and slower exits, diligence must do more than confirm whether an asset is attractive. It should reveal where value can realistically be created, how confidently it can be underwritten, and what needs to happen from day one to capture it.
The fundamentals of healthcare are still intact. What's changed is the standard of proof.
Aging populations, care delivery and therapy innovation, pressure on health systems to do more with less: these tailwinds have not gone away and will not for the foreseeable future. No wonder healthcare remains a priority sector for private equity investors.
But the investment environment is different. Higher cost of capital, longer hold periods, and more selective exit markets have all raised the bar. The difference is that attractive market, credible position, and solid historical growth no longer close the IC conversation.
Investors need a clearer, more quantified answer to the question that actually drives returns: how much commercial value can be created after acquisition, and how much of that can be underwritten before signing?
Getting to that answer requires more granular expertise than it did a decade ago. Healthcare is not a single market. Value drivers, buying processes, pricing freedom, channel dynamics, evidence requirements, and risk factors vary significantly across sub-sectors and even sub-sub-sectors. Understanding those differences is essential to assess where commercial upside is real, where it is constrained, and what it would take to capture it.
Market validation is necessary, but not sufficient
Traditional commercial due diligence still matters. Market sizing, competitive dynamics, customer concentration, business plan stress-testing: none of that goes away. But in today's environment, it is the floor, not the ceiling.
A target can sit in an attractive market, with a defensible position and a clean growth profile. It may still leave the most important question unanswered: what can the new ownership unlock? Where is the commercial upside, how big is it, what does it take to capture it, and what happens if it does not materialize?
These questions require taking your due diligence further, not just validating the market, but actively pressure-testing the commercial engine. This is where Simon-Kucher's Healthcare Transaction Services team delivers through two dedicated offerings: Pricing Due Diligence (PDD) and Value Creation Due Diligence. Both sit alongside our traditional buy- and sell-side CDDs and are fully dedicated to identifying and quantifying commercial value creation.
Pricing due diligence: Is the target capturing the value it creates?
A PDD starts from a simple premise: most healthcare businesses are not fully monetizing the value they deliver. It’s important to identify whether that gap is real, how large it is, and whether it can be closed.
That means testing pricing headroom by segment, customers' willingness to pay, discounting behavior, packaging logic, service monetization, and price realization risk at a granular level. In healthcare, this requires understanding the buying structure. Decision-making is multilayered across clinicians, procurement teams, payers, and administrators, and the product user is often not the economic buyer.
Pricing headroom depends on where a target sits in that dynamic. Our 40-year legacy as a pricing specialist allows us to reach evidence-based answers on these questions within the pace of a transaction process.
Some healthcare markets leave little room to move. Reimbursement structures, tender pricing, and payer pressure constrain the opportunity. Others offer meaningful room for differentiated or value-based pricing, where a target can demonstrate superior quality, lower total cost to deliver care, or measurably reduced operational burden. A PDD distinguishes between the two and identifies what form the opportunity takes: not just price levels, but packaging, tiering, bundling, and discount governance.
Value creation due diligence: What can new ownership realistically change?
Our Value Creation DD takes a broader view. It asks what commercial upside exists under new ownership beyond what management has already planned, and beyond what market growth alone will deliver.
The most consistent finding is that the biggest opportunities are often inside the existing customer base. Untapped cross-sell and upsell potential is frequently visible in the data but absent from the business plan. This occurs usually because the proposition is not sharp enough, account ownership is not clearly defined, or the sales motion is not built for expansion selling. Our Value Creation DD tests whether the organization can capture it.
The same discipline applies to salesforce decisions. Whether expanding or right-sizing holds up depends on productivity benchmarks, territory design, incentive alignment, and leadership capacity, all of which need to be tested before they are baked into a model. At Simon-Kucher, we go beyond FTE-benchmarking. Our experience as commercial advisors allows us to pressure-test whether the target's commercial setup is fit for purpose, and what would need to change to capture the opportunity.
Identifying levers is only useful if you can quantify them
An IC cannot underwrite a theme. For each commercial opportunity, investors need to understand size, timing, confidence level, implementation complexity, and risk. A pricing improvement executable under 12 months with limited churn risk has a fundamentally different value than a commercial transformation requiring new systems, new leadership, and a multi-year change agenda.
Quantification is central to how we work. We translate findings into valuation inputs such as revenue uplift potential, EBITDA impact, phasing, required investment, and execution risk, triangulating top-down quantification, bottom-up modeling, and benchmarks from comparable companies. The output is a set of investment case inputs: what belongs in the base case, what belongs in the upside case, and what needs to be true for each.
Many investment cases include commercial value creation themes such as pricing headroom, cross-sell potential, and sales productivity, but the evidence behind them is often thin. Our diligence approach is designed to close that gap before signing, not after, giving investors greater conviction on underwritable upside and a day-one value creation agenda ready to execute from close.
Making healthcare PE value creation investable
Investors need to know before signing which commercial levers are real, how much they are worth, and what it will take to capture them. Our Pricing and Value Creation Due Diligence offerings turn that upside from a post-close aspiration into a pre-close investment case input.
Simon-Kucher brings 40+ years of experience on commercial topics in the Healthcare and Life Sciences space, 1,000+ engagements per year, and a global dedicated HC&LS team of 400+ consultants across 30+ offices worldwide. Through our co-partner model, we bring together transaction specialists and the most relevant experts from our 50+ HC&LS partners, navigating sub-sector complexity from buyer dynamics and willingness to pay to pricing freedom, channel structures, and execution risk. We turn commercial hypotheses into underwritable value creation opportunities.
The difference between a good asset and a good investment is often decided before closing. If you’d like to discuss how to develop and implement ambitious yet realistic value-creation plans for your portfolio businesses, connect with our experts today.
