𝗛𝗼𝘄 𝗱𝗼 𝘆𝗼𝘂 𝘁𝘂𝗿𝗻 𝗮 𝗖-𝗚𝗿𝗮𝗱𝗲 𝗽𝗲𝗼𝗽𝗹𝗲 𝗿𝗶𝘀𝗸 𝗶𝗻𝘁𝗼 𝗮 𝟯.𝟰𝘅 𝗠𝗢𝗜𝗖?

Case Study: Momentum Health & North Peak Capital

From Quantified Risk to Accelerated Returns

Client: North Peak Capital¹ (Private Equity Firm)

Portfolio Company: Momentum Health¹ (Healthcare Technology)

Engagement: Pre-Acquisition QoX Diligence & Post-Close Human Capital Transformation

The Challenge: Underwriting a High-Stakes Bet

In late 2024, North Peak Capital, a middle-market private equity firm, was deep in diligence on Momentum Health, a promising healthcare technology company with $32 million in annual revenue. The investment thesis was clear: accelerate growth and achieve a top-quartile return. However, the deal hinged on the 360-person team's ability to execute an aggressive value creation plan. North Peak’s deal team felt confident, but they knew that "gut feel" about people doesn't satisfy an investment committee. They needed to move from subjective conviction to objective, defensible data.

The Diagnosis: The QoX™ Diligence Advantage

North Peak engaged NextArc to conduct a comprehensive Quality of Execution (QoX) Audit. In just seven business days, NextArc’s diagnostics converted uncertainty into a clear, quantifiable risk profile.

The QoX HC Risk Score report revealed a company whose operational maturity hadn't kept pace with its growth, returning a C-Grade score of 61. The audit identified 16 critical areas of risk, including an ad-hoc compensation structure, inconsistent talent acquisition processes, and a lack of formal management training.

These weren't just abstract findings. NextArc quantified the risk into a tangible Human Capital Debt of $385,000—the estimated cost to remediate these foundational issues and build a scalable platform for growth.

The Deal: Data-Driven Negotiation

Armed with this objective, third-party data, North Peak’s position in the negotiation was transformed. The QoX report provided the "air cover" needed to address specific liabilities:

• Valuation Adjustment: The data justified a more disciplined valuation, reflecting the necessary investment to de-risk the human capital platform.

  
  

• Targeted Escrows: The audit revealed a lack of standardized employment agreements for several key technologists and ambiguity in the classification of certain field-based contractors. North Peak successfully negotiated a $250,000 escrow set-aside to cover potential legal exposures and contract remediation costs, directly protecting their investment.

The Day 1 Plan: From Diligence to Action

Upon closing the acquisition in early 2025, North Peak immediately extended its partnership with NextArc. The QoX diligence report wasn't just a deal tool; it became the blueprint for a Day 1 Human

Capital Improvement Plan.

The initial 100-day plan focused on the highest-priority risks:

1. Fixing Compensation: Launching a comprehensive compensation benchmarking study and designing a formal salary structure to attract and retain top talent.

   
   

2. Scaling Talent Acquisition: Implementing a modern applicant tracking system (ATS) and training managers on structured, behavioral interviewing techniques.

   
   

3. Building a Leadership Pipeline: Designing and rolling out a foundational management training program for all people leaders.

Nine Months of Progress: Executing the Forecast

Nine months into the engagement, the progress at Momentum Health is impressive and tracking directly against the projections laid out in the PE Human Capital Value Creation Forecaster.

• Early Wins: The new compensation structure has already been instrumental in closing three critical senior hires and has reduced regrettable turnover in the engineering department by 18%.

  
  

• The Bolt-On Test: Four months post-close, Momentum Health acquired CareSync¹, a small 12-person competitor. This presented an immediate integration challenge. NextArc seamlessly folded the CareSync team into the master human capital plan, using the new onboarding process to align them with Momentum Health’s culture and the new career pathing framework to demonstrate a clear future for the acquired talent. This intervention prevented the "us vs. them" friction common in bolt-on acquisitions.

  
  

• Tracking to Target: The initial forecast projected that the $385,000 human capital investment would lift the expected MOIC from a baseline 2.6x to an accelerated 3.4x. Based on the operational improvements and enhanced leadership capability observed to date, the company is on a clear trajectory to meet or exceed this accelerated target, putting it on pace to deliver a Human Capital ROI of 78.6x.

  
  

Conclusion: A Blueprint for Success

The partnership between North Peak Capital and NextArc at Momentum Health demonstrates the profound value of a data-driven human capital strategy. By quantifying risk during diligence, North Peak secured a better deal and, more importantly, gained a validated roadmap for value creation. The post-close execution is turning that roadmap into reality, proving that the most effective way to guarantee a top-tier financial return is to invest in the people and systems responsible for delivering it.

¹ North Peak Capital, Momentum Health, and CareSync are pseudonyms used for confidentiality.

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