The Healthcare Services sector has seen considerable private equity (PE) funding across buyouts, growth and venture capital (VC). In 2025 alone, global PE healthcare deals hit $190 billion, the second highest ever for the industry.[1] A variety of factors make the sector particularly attractive across Indian markets, ranging from economic and political agnosticism to scalability and The successful integration of a target into a larger platform can result in 40% more value for stakeholders and make deals 2.6% more likely to succeed.[2]

As private equity firms increasingly pursue buy-and-build strategies in fragmented specialized healthcare provider segments and these healthcare companies implement more technology and AI solutions, the nature of financial due diligence (FDD) must fundamentally evolve.

It is no longer sufficient to assess a target acquisition in isolation, especially in cross-border transactions. The paramount FDD challenge now lies in rigorously evaluating a target’s platform readiness. This involves:

• Defining platform readiness;
• Understanding the challenges of cross-border integration;
• Quantifying financial risks and costs; and
• Identifying platform-ready transaction best

Defining Platform Readiness in FDD

Before initiating the acquisition process, PE firms must fully understand what platform readiness—the capacity for seamless financial, operational, and regulatory integration into a larger, often geographically dispersed and potentially cross-border, parent entity—within the transaction looks like and quantify the unique financial risks and costs associated with this multifaceted integration process. This goes beyond the acquisition target and involves both the parent company and the acquisition strategy.

The first step involves carefully analyzing the acquiring company. Acquirers need to have well-documented, accurate and timely financial reporting for their existing assets to ensure that future acquisitions can be integrated without compromising the financial visibility or compliance of the parent company.

Additionally, PE firms should assess the impact of accounting under different standards as part of their FDD, as different standards may impact EBITDA levels and there may be potential benefits to changing prior to exit.

When the time comes to assess the platform readiness of target assets, acquirers cannot rely on traditional FDD approaches that focus on standalone acquisitions. Instead, they must analyze whether the target can serve as a scalable foundation for future acquisitions and whether there is an opportunity to drive synergy through cross-sell, economies of scale, and corporate infrastructure optimization, among others. Acquirers need to understand the suitability of IT, finance, HR, and other systems for scalability and integration rather than just validating historical financials, as thorough due diligence in these areas can identify opportunities or additional investments that may be needed to scale platforms and optimize profitability.

But what are the key financial, operational, and regulatory factors that determine a target’s platform readiness?

• Financial – Targets with robust financial audit and tax compliance processes, mature accounting and finance teams, and consistent application of accounting policies are more likely to show platform readiness.
• Operational – A sustainable revenue base, realized cost take-out initiatives based on peer benchmarks, and revenue enhancements—such as the expansion of digital networks, the enhancement of outpatient to inpatient conversions and outpatient to pharmacy conversions, and the reduction of average length of stay—are key factors to platform readiness. Additionally, having a sophisticated and mature technology stack, including an enterprise resource planning (ERP) system, in place can expedite integration and reduce the need for additional investments to fill gaps.
• Regulatory – Especially in cross-border situations, the impact of tariffs, exchange control rules and, in developing countries like India, employee-related compliance can be significant indicators of platform readiness. Additionally, having an established regulatory team supporting various application submissions and approval processes with regulatory bodies, such as the U.S. Food and Drug Administration and the European Medicines Agency, helps with the onboarding of acquisitions.

Challenges of Cross-Border Integration in Specialized Healthcare

Planning for an acquisition also involves considering post-acquisition integration and the challenges that come with it, especially when it is a cross-border transaction. By acquiring platform-ready assets, firms can mitigate these challenges and enable smooth integration.

Cross-border entities carry their own set of unique challenges and require a gradual approach to integration. Some of these integration challenges, including the dependency on doctors and physicians for center growth, capacity constraints, and time to maturity, are common across the overall healthcare sector. Organizations spanning multiple jurisdictions often must confront various taxes, government regulations, and compliance requirements. Different markets will also have different regulatory environments, cultures, pricing, and payment models within healthcare and business that need to be considered.

While these challenges can impact the level of integration, they can also result in financial risks during the integration into a larger, geographically dispersed parent entity. Major risks include:

• Struggles with employee onboarding to the platform and key-person—provider— risk when transitioning practices and operations to new platforms
• Inconsistent billing processes and payment terms or insufficient central oversight and control of costs
• Difficulties overseeing cash flows and working capital requirements
• High costs when harmonizing costs and systems
• Differences or misalignments in accounting standards, reporting, and how frequently used key performance indicators are defined

Even if these challenges are understood, their risks need to be quantified to fully determine a target’s platform readiness and ensure thorough and accurate FDD.

Quantifying Financial Risks and Costs of Integration

When evaluating an acquisition, private equity firms must conduct financial due diligence to mitigate risks and facilitate seamless integration. However, relying solely on standard FDD is not sufficient. Legal, technology, HR, and operational due diligence are all critical pieces of an acquisition, and the outcomes can influence integration costs. The range of technologies within the target and the cost of integrating systems as well as organization structures, competency frameworks, and compliance efforts must all be accounted for before a deal can be completed. If local privacy laws allow it, a forensic background check on key management and business practices could also reveal nuances not visible in the results of other due diligence work. 

Most important, though, is operational due diligence. It is a critical and valuable workstream and assessing existing and acquired infrastructure and staff can result in the identification of cost savings and efficiencies upon acquisition. However, this often results in one-time costs related to redundancies, and onerous costs can often be incurred for a sustained period until the end of contractually agreed terms for licenses, leases, and subscriptions.

Best Practices for Evaluating Platform Readiness

Evaluating platform readiness can be challenging, but by following best practices, PE firms can successfully assess potential acquisitions.

The first step is to prepare a playbook to list all financial, commercial, and operational factors important to the acquisition decision with a weight to relevance. A playbook can ensure the right work is assigned to the right workstream. For instance, most data requirements are common, and the financial stream is best suited to discover information and anchor discussions with the target with the help of relevant functional experts. However, the operations stream can align with baseline numbers that will be used to assess any operational efficiencies. Once the information for the playbook has been settled, PE firms should probe the quality of the financial team and systems used as part of the DD process.

PE firms can also benefit from the use of AI and data analytics when assessing trends, underlying financials, benchmarking targets against existing portfolio companies and competitors, and evaluating platform-readiness. AI and data analytics can also help speed up due diligence with the quick identification of issues and underperforming branches and nodes in the network, which can support the development of an investment thesis and go-no-go decisions.

The Future of Financial Due Diligence in Healthcare M&A

With the increased focus on cross-border healthcare M&A, and the uncertain political landscape, FDD will necessarily go beyond quality of earnings and net debt to include operational and value creation drivers. Given the commonality of historical data requirements and analytical capabilities, the FDD workstream is best placed to assist platforms in a holistic assessment of targets.

The adoption of technology and AI is set to disrupt some of the traditional models, providing more offshoring and value creation opportunities and leading to process and operation efficiencies.

To succeed in the increasingly competitive and complex healthcare buy-and-build landscape, PE firms must look for operational and efficiency opportunities to increase valuation and competitiveness and offer stakeholders certainty in the process.

How A&M Can Help

Alvarez & Marsal’s Transaction Advisory Group works with PE funds, buyers, and sellers to prepare for and execute complex, cross-border transactions. With experience in the specialty healthcare space, an awareness of regulatory requirements, and access to wider A&M resources, we can help clients identify platform-ready assets, conduct FDD, and prepare for implementation. 

Unlock the full potential of your business. Contact us today to learn how our M&A solutions can help you navigate the complex buy-and-build landscape.

[1] Private Equity Deals in the Healthcare Sector Reached $190 Billion Dollars in 2025

[2] Integrating Companies After Acquisition: A Powerful Strategy