By Newspot Nigeria Business Desk
A detailed account shared by healthcare investment professional Akin Odubitan has revealed how a multi-million-dollar hospital acquisition in Lagos fell apart after numerous hidden issues surfaced during due diligence.
Odubitan explained that a UK impact fund had been in talks to buy a 32-bed hospital in Ikeja GRA. At first glance, the hospital appeared organised and investment ready. It had consulting rooms, two operating theatres, a maternity section, a pharmacy, a laboratory and a freshly repainted reception — the sort of setup that gives an impression of stability.
The sellers also presented strong financials, including claims of over ₦1.2 billion in yearly revenue, good margins and steady patient volume. Based on those figures, the investors reportedly placed a $1.5 million deposit toward a valuation of about ₦6.5 billion.
However, once the buyers began to dig deeper, Odubitan said the documents and operations failed to match the initial presentation. The inconsistencies eventually forced the investors to withdraw from the deal.
Below are the specific issues Odubitan highlighted:
Key Red Flags That Collapsed the Deal
- Maternity income was shared with external midwives.
What looked like a major revenue stream belonged partly to outside midwives, reducing the hospital’s actual earnings. - The pharmacy was not owned by the hospital.
Odubitan noted that it belonged to a relative of the founder, registered under a separate CAC entity. - About 30% of surgeries were done off-site.
Some consulting surgeons worked from other locations, meaning the hospital’s surgical figures were overstated. - NHIS accreditation had expired.
Despite being presented as active, the approval had lapsed 15 months before negotiations even began. - Bed occupancy was only estimated.
The claimed 80% occupancy rate had no supporting records or tracking system. - Serious salary arrears.
Only 10 out of 56 staff had been paid within the last three months, raising concerns about staff morale and retention. - Cash collections lacked structure.
Daily revenue was handled by three different individuals, making proper reconciliation nearly impossible. - CAC records still listed the deceased founder.
The Corporate Affairs Commission had the late founder as the legal owner years after his passing, complicating ownership transfer.
The deal, which had dragged on for months, eventually collapsed under the weight of these findings. Odubitan’s breakdown highlights the gap between presentation and operational reality in many healthcare facilities, especially in mid-size acquisitions where businesses look polished on the surface but operate informally behind the scenes.
Newspot Nigeria will continue to monitor developments in the healthcare investment space as similar cases continue to emerge.
