Putting Your Best Book Forward
Representatives of healthcare business sellers and buyers often refer to the “book” – a collection of information that is unique to each seller’s company, while containing some relatively generic data across the spectrum of services and products. While this book is usually only created at the time of a business listing for potential buyers who sign a confidentiality agreement, it is useful to put one together far in advance. In fact, it’s one of the best ways for you to look at your company through a buyer’s eyes.
While reasonably comprehensive, here are some pages from a typical book that you can easily assemble on your own:
- Two or three years of past financial results, including year-to-date (YTD) financials. Buyers often look at recent trends, so if you can look at a 12 month “rolling” total, with profit & loss/balance sheet totals, you will be at the top of your class.
- A segregation of services/products types by revenue source and location. This exercise alone has led some owners to tweak their business model.
- A current organizational chart.
- A list of all contracts and leases, whether providing revenue or expense- related with the length of all obligations. Putting all of these in a timeline can be an enlightening experience.
- A list of all employees and contractors segmented by rate and benefits, as applicable. There are multiple ways to manipulate this data and learn more about your business model.
- A dashboard of performance indicators for your organization.
- A list of all clients/contractors by revenue source and location.
- A compendium of all new opportunities you have been exploring, initiating and/or considering.
This last item can be one of the most revealing. While you believe your growth may be restricted by cash flow, a more complete truth may be cash flow that is restricted by other current revenue sources that are characterized by low reimbursement, high expense and terrible receivable turnover. How do you think a potential buyer will evaluate this circumstance when looking at your book? Save yourself the suspense and put your book together soon.