The Implication of Healthcare Reform: A Note to Sellers

While there are still many unknowns in the healthcare reform of the Obama administration, one thing is clear – healthcare business buyers are bringing the possible consequences to current and future transactions.

How?

Buyers are attempting to model the financial impact of healthcare reform compliance in potential purchases and they are injecting this element into their negotiation.  The result of this approach can be particularly troubling for healthcare business sellers who may have catastrophic-type health insurance or even no healthcare insurance at all for their employees.  What should a seller do given these circumstances?

There are multiple possibilities:

  • Make sure you fully utilize your current insurance agent/company to help your model potential compliance expenses, which will likely be in the form of a range, not an exact number. Armed with this data you will be able to more effectively negotiate your position.
  • Explore more than one scenario for compliance because there will likely be more than one in all 50 states.  Model these scenarios with estimates for additional expenses, if any.
  • Consider a potential restructuring of your entire benefits package in the process of modeling compliance.   Your current insurance representative (or others) may help you find a creative model that will mitigate your financial risk.

By employing the above you place yourself in a stronger position, whether you decide to sell now or later.  If it’s now, you will be more effective in your negotiation with a potential buyer.  If it’s later, your company will have a solid value proposition for the future.