February 22, 2016

IBM’s Truven Acquisition – Quintessential Convergence

Last week, IBM announced its $3.5 Billion acquisition of Truven Health Analytics, the former healthcare business of Thomson Reuters which Veritas Capital acquired in 2012 for $1.3B (estimated 4+x cash on cash return).  Now a part of the Watson Health business, Truven adds health information on 200+ million patients and over 8,000 insurers, hospitals and government agencies to IBM’s data trove. IBM intends to utilize Watson in combination with the Truven data (and the other recent healthcare acquisitions IBM has made, now totaling nearly $5B) to provide unique value-based care insights to its healthcare clients.  This is a great example of the convergence of data and technology, but the convergence story does not stop there. Under Veritas’ ownership Truven also made a number of acquisitions itself, most notably in the consulting arena when they acquired Simpler Consulting in 2014.  Simpler was the leading operational improvement consulting firm for the healthcare industry. Truven viewed the Simpler acquisition as an opportunity to combine its unique data with real operational improvement expertise to help its clients maximize the use of that data, and create sustainable improvements as business models in healthcare shift from a fee-for-service model to managing for outcomes. Clearly, IBM sees value in that strategy and continues to be a leader in its solution approach, offering a unique combination of proprietary data, technology, and consulting to solve cutting edge business problems. We expect this convergence to continue to accelerate and be a key driver for M&A throughout 2016.