Case Study: Lorient Capital

Topline helps a healthcare-focused PE identify a long-term winner during Covid

CLICK HERE or the image above to view an interview with David Berman

Lorient Capital is a healthcare-focused private equity firm that invests in lower middle-market companies and founder-owned businesses. Lorient Capital has built a successful portfolio of investments since it was founded in 2015 by having a key eye for investing and an ability to manage operations and unlock growth at its target companies.

In 2020, the company was eyeing a new target: Shiftkey. Shiftkey is a marketplace for nurses and healthcare facilities to connect to provide per-diem and per-shift work opportunities, bringing both groups together to fill vacancies in their schedules.

Shiftkey came onto Lorient Capital’s radar screen when the company started working with an advisor in 2020, as its business expansion was being hampered by a lack of capital. Lorient Capital began its due diligence in December 2020 – well into the Covid pandemic and subsequent lockdown which had begun earlier that year.

“Shiftkey was growing rapidly and we were lucky to be able to negotiate terms with them,” said David Berman, Managing Partner at Lorient Capital. “As part of our due diligence, we wanted to understand what was going on with their customer base, both on the facilities side and on the nurse side.”

Like many healthcare technology companies, Shiftkey was seeing meteoric growth during that period. The challenge for Lorient Capital was figuring out whether it was seeing a temporary bump due to Covid-related factors, or if it had the quality of earnings and operations that would allow that growth to continue after Covid subsided.

Not Just Shelfware

Lorient Capital turned to Topline to ascertain both.

“At the time (we started working with Topline), it was the middle of Covid – December 2020. It was tough to figure out how much of the growth was sustainable,” said Berman. “The Topline team was able to come in and help us and get qualitative data to help make our decision around our investment.”

At many consulting firms, the results of investor due diligence assignments are important at the time of purchase but are seldom consulted after that. This research is referred to as “shelfware,” shorthand for work that checks all the critical due-diligence boxes and then lands on the shelf, where it stays, untouched, forever. 

Apparently, Topline did not get the memo; Topline’s work on Shiftkey provided a valuable guide for management at that company. Both Lorient Capital and the management of Shiftkey regularly consult Topline’s research to help the company maximize sales and revenues.

“The company (Shiftkey) repeatedly referred back to the due diligence to figure out how to prioritize their go-to-market strategy. They used it for everything from how to position the product, to what features to prioritize in the development queue,” said Berman. “All of that was super helpful for us and Shiftkey management.”

The Topline Difference

One key differentiator for Topline was the level of detail and insight that it was able to produce – much deeper than the big consulting firms that Lorient Capital had worked with in the past. 

“We’ve used bigger firms to do market studies,” said Berman. “I think the level of detail that they go into and the data that they’re able to collect is not as robust as what Topline was able to provide us. The insights from them have been much better.”

 This was due to the fact that the Topline team brought a deep understanding of the industry with it. That helped them save time, and provide deeper insights, than what Lorient Capital had received in the past from larger consulting firms.

“The Topline team has also taken a lot of time to get to know the businesses that we’re invested in versus the generic product that would come out from a larger consulting firm,” said Berman.

The differentiator, Berman explained, was the people, who had the skills and the character to get to key insights quickly.

“I think they just hire smart and scrappy people who are willing to dig in and do the work,” said Berman. “It’s the team that’s the differentiator at Topline.”

The company also brought process, built on transparency and regular communications, and was agile enough to work with the unpredictable schedule of a busy private equity shop.

“The Topline team is always available to jump on the phone and talk through where we’re at,” said Berman. “We’ve probably been challenging to work with at times, given all the starts and stops that happen through the deal process. Topline has always been very accommodating and flexible, and willing to work around our schedule.”

A Continuing Relationship

Topline’s insights paid off for Lorient Capital and Shiftkey in a major way, helping the latter triple its growth in 2021.

“Topline’s research has been invaluable in terms of helping us prioritize the roadmap and focusing the team’s attention,” said Berman. “I can tell you that the business grew three hundred percent last year. We can ascribe a portion of that to Topline.”

Because of the success of the initial work with Shiftkey. Lorient Capital is tapping Topline for another portfolio company, updates of the existing research, and a Shiftkey acquisition due diligence as well.

“We just started to work on a new diligence product around an acquisition that Shiftkey is making,” said Berman. “We’ll be following the same plan as the last time – a market study as well as a look into the company’s customer base, evaluating it both from an investment perspective and assessing potential synergies between the two companies.”

Topline Strategy

Topline Strategy is a boutique consulting firm that specializes in growth strategy for Business to Business Technology and Innovative Healthcare businesses and their investors. Our clients range from core IT infrastructure companies to technology-enabled business services. Since 2001, we have completed hundreds of engagements for companies ranging from start ups to Fortune 500 companies. Our work has enabled our clients to generate hundreds of millions to billions in new revenue and market capitalization.

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