When the time comes for you to sell your durable medical equipment (DME) company, there will be a lot of work required to go from putting the company on the market to completing a successful transaction. If you want that sales process to go smoothly, there's a good deal of work you'll want to complete before you start the sales process.
Here are seven of the key steps you should take that will better ensure your DME company sells for a fair price and to the right buyer.
1. Get your DME house in order
What does it mean to get one's house in order concerning the sale of a company? It boils down to your business functions. Owners of a business typically do not undertake deep dives into their financials and performance, but that's what a prospective buyer will do right off the bat. Owners need to put themselves into a buyer's shoes and assess the balance statement, key financial metrics, employee and payor contracts, assets, processes, the legal structure of the business, and other areas to see what stands out — and not in a positive way. What might be a potential red flag to a buyer? What could be a major hassle for a new owner or lead to difficult questions during the due diligence process of a sale? For example, are you over-indexed on operating expenses? Will buyers ask why your opex exceeds 40%?
Once you have completed this assessment, work to fix the issues you identify — especially the low-hanging fruit — to the best of your ability before you bring your DME business to market. Doing so will allow you to hedge off some of those questions and ultimately make your company more presentable.
2. Tell your growth story
When a buyer is considering your company, they're going to want to see that you're profitable. But more importantly, they're going to want to understand how you can become more profitable — i.e., What is the runway for you to grow? As you are preparing your company for a sale, develop the story that will explain how you are going to grow over the next 3-5 years. What's going to differentiate you in the industry? How are you going to stay ahead of trends?
This is all very important. I've been part of the leadership team for several companies that sold, and for each of them I was the sales or growth leader. When we developed our confidential information memorandum (CIM)*, most of the time was focused on where we expected we could grow. What was our secret sauce? How could we expand sales? Expand payer contracts? How were we going to buy smarter to reduce expenses? A strong growth story is likely to increase your DME company's multiple.
*Note: If the concept of a CIM is new to you, I recommend reading this recent column by my colleague David Purinton. It defines the concept of a CIM, shares best practices, and identifies what to include in your CIM.
3. Put together the right DME transaction team
For most durable medical equipment company owners, the sale of their company will be a once-in-a-lifetime experience. The sale is the conclusion of years of hard work and sometimes even some blood and tears. It's not surprising that some DME owners are on the fence about whether to bring in outside help for the transaction because of the costs involved in engaging an advisor and other support, which is money that comes out of the seller's pocket.
But just as most owners had help setting up their company, they will be best served getting help selling their company. The right assistance can not only translate into a higher sales price but also avoid costly missteps, mistakes, and a prolonged transaction. Experience shows that an outside advisor, whether it's someone from VERTESS or another healthcare mergers and acquisitions (M&A) firm, helps owners better identify and address challenges, take advantage of opportunities, emphasize what makes the company special, and create the competition for the sale that drives up the multiple.
A traditional operator will likely not know how to put a CIM out to market or get it into the right buyers' hands. Owners may have a few people in their index they think could have interest in acquiring the company, but taking this approach means you're missing out on the opportunity to cast the wider net that creates the competition you want and brings in different types of buyers.
In addition to brining on a healthcare M&A advisor, and preferably one with DME experience, other members of the transaction team should include an accountant and legal advisor with healthcare transaction expertise. The right team will make the sales process go more smoothly and help ensure the sale reflects the years of work and investments that have gone into the company.
4. Fully understand your durable medical equipment company's vulnerabilities
This ties back to getting your house in order. You must understand where your company is vulnerable. Will any of your contracts soon be susceptible to compression? How are you going to stay ahead of that development? Is competition coming out with a new product that may put you in a less competitive position moving forward? Is there anything under the hood of the company that could be considered a weakness?
Once you identify your vulnerabilities, you'll want to do one of two things. If you can fix a vulnerability, you should. If it's not a simple fix, at least develop a strategy for how you will overcome it.
5. Understand your value from the buyers' perspective
Nearly every owner I've worked with contemplating a sale has a price they firmly believe they should receive for their company. This figure may be achievable, but there are a lot of factors that will influence the final sale price — and the potential for the price to end up higher than what a seller believes is fair and possible.
To gain a better understanding of how a sale may play out, DME owners will want to start thinking about their likely buyers, what these buyers are looking to get out of the business, and how these buyers may deploy the business following the transaction. Is one potential buyer a private equity platform looking to add more companies? Will the seller's company be an additive to other companies a firm currently owns? Might the acquisition be a strategic buy?
In these and other scenarios, owners should ask themselves: What's the value your company brings to potential buyers? What are the buyer's immediate and longer-term needs? Understanding what the buyer is looking for is helpful in determining how to best present the company in your CIM. You want to position your company to how it will meet those needs so you can secure a price that matches or even exceeds what you may have calculated before the sales process begins.
Putting yourself in buyers' shoes also helps establish more realistic sale expectations. In some instances, this will require an owner to come to terms with the fact that their company is not worth what they hoped or expected. Determining what a buyer will and will not value and what your company is likely to sell for ties back to assembling your transaction support team and leveraging their guidance and expertise.
6. Keep your management team focused on business, not the transaction
A DME company's management team will be involved in the sale. They will be a part of the CIM development process and helping with due diligence. But one of the worst decisions an owner can make is to have their management team focus so much on the deal that they take their eye off the business. You want to make sure your executive team and the management team underneath them are involved in the transaction as much as necessary, but their day-to-day focus should be on delivering your services, growing the business, and executing your strategic plan. The last thing you want is your company's performance to fall off as you are working to complete a sale.
7. Consider your post-deal involvement
A final essential step to take before bringing your durable medical equipment company to market is to consider the role and level of involvement you're looking for in your company following its transaction. That's going to greatly influence the type of buyer you want to target. Do you want to fully exit? If so, understand that this may turn away some buyers who are not interested in investing in finding and onboarding a new CEO or any other executive position you hold.
If you want to stay on with the business, make sure the buyer understands the position you are looking for following the sale. Is it a board position? Do you still want to be in an operator position? Do you want to give up full control? Half control? These are questions to firmly answer before initiating the transaction process.
Selling Your DME Company: Do the Work, Reap the Rewards
When you conclude that it's time to sell your DME company, you may be eager to start the sales process and find out what your business is worth. But rushing into the process is going to do more harm than good. By allocating the time and resources to effectively complete the steps described above and others recommended by your transaction team, including your DME M&A advisor, you will strengthen the performance and appearance of business, become more attractive to buyers, and should end up securing a sales price that rewards you for building a successful durable medical equipment company.
Gene Quigley
For over 20 years I have served as a commercial growth executive in several PE-backed and public healthcare companies such as Schering-Plough, Bayer, CCS Medical, Byram Healthcare, Numotion, and most recently as the Chief Revenue Officer at Home Care Delivered. As an operator, I have dedicated my career to driving value creation through exponential revenue and profit growth, while also building cultures that empower people to thrive in competitive environments. My passion for creating deals has helped many companies’ platform and scale with highly successful Mergers and Acquisitions.
At VERTESS, I am a Managing Director with extensive expertise in HME/DME, Diagnostics, and Medical Devices within the US and international marketplace, where I bring hands on experience and knowledge for the business owners I am privileged to represent.
We can help you with more information on this and related topics. Contact us today!
Many small healthcare business owners struggle when they achieve a certain size or revenue stream. While these owners may see an opportunity to scale, there are challenges: They still have the "mom-and-pop" ideology (i.e., small company mentality) and their organization is not ready or capable of scaling up.
This can be a frustrating experience for an owner. They feel their company can do so much more business, yet they lack the capital, know-how, technology, and/or experience to transform their healthcare organization from a small business (e.g., $20 million in revenue) business to a much larger business (e.g., $100 million in revenue).
Such a situation is risky for a healthcare business owner. If the owner attempts but struggles to grow the revenue and/or EBITDA of the company, this could greatly devalue the business in just a few years. But that doesn't mean owners should abandon their vision for growth. Rather, they may want to explore a sale or recapitalization.
By pursuing one of these options, owners can accomplish a few worthwhile goals. They can get a nice, first "bite of the apple" for their business. They reduce their financial risk by no longer having so much of their finances in one basket. If they stay involved with the company as either a CEO or board member, they can work with a financial or strategic buyer with the experience and resources to scale and accelerate growth. This collaboration can make achieving growth goals possible and do so in much less time than if the owner attempted to achieve such growth on their own. If growth is successful, the owner and existing (or new) management team would be able to get a second — and likely much bigger — bite of the apple and then cash out with the right rollover or stock incentives.
7 Steps to Achieving an Ideal Healthcare Transaction
If proceeding with a sale or recapitalization sounds like a good plan for your business, follow these seven steps to help find the right buyer and partner who can help you take your healthcare company to a much higher level.
1. Set your healthcare transaction goals
Take time to determine the goals for the transaction you're considering. Make goals lofty but achievable. To accomplish the latter, put together a supporting team that will provide the backing and expertise you need to develop an optimal plan for moving forward. This team should be comprised of key internal executive leaders, such as the chief operations officer and chief financial officer, and key external professionals, such as a healthcare M&A advisor (like one from VERTESS), attorney, and accountant.
2. Outline your ideal situation as the owner/leader
How much of your company are you willing to sell to acquire the resources needed to achieve your growth plan? In what capacity do you want to remain with the organization following a transaction? Answering these and related questions concerning what you envision as your company's post-transaction situation and your level of continued involvement is important to ensuring an optimal outcome when your company goes to market.
3. Assess your organization's personnel
Start with your immediate leadership team and cascade down. Ask yourself questions like: Do they have the drive, capability, and experience to take on this journey? Can you envision them as part of a company you hope will be a few or even several times larger in just a few years? If you cannot answer these questions with a confident "yes," you may need to consider changes to your personnel — which brings us to the next step…
4. "Topgrade" your leadership team
Before you proceed with bringing on a financial partner, you will want to consider topgrading your leadership team. Topgrade means two things: It can be a nice way of saying upgrade your team by replacing existing leaders with better qualified leaders, and it can mean improving your current team though training.
Why is topgrading important when contemplating a sale or recapitalization? This is not the time to hope you have the right people or look past shortcomings that make these individuals less effective in their roles. Be prepared to replace leaders or find them new roles that will be better fits in support of the overall growth plan, or at least consider whether training can strengthen your existing leadership team.
If you have a solid leadership team, it's still worth taking the time to identify knowledge gaps and then invest in training and executive coaching. A financial buyer will see much higher value in an organization that comes to the table with an all-star leadership team already in place and ready to put in the work that can help achieve growth goals.
5. Test the transaction waters
Even when owners are not necessarily looking to sell, they should always be putting feelers out to gauge buyer interest in their company. This way, they won't miss key opportunities to bring in a partner, sell, or recapitalize.
If you're serious about testing the waters, this is a great time to speak to a healthcare M&A advisor and receive a valuation on your organization. A good advisor will coach you on whether it is the right time to sell and provide advice on what you should do to better prepare for a successful sale. An advisor can share competitive insights (e.g., previous competitive sales and multiples) and paint a picture of what buyers are currently looking for — and, just as important, not looking for.
If you decide to sell, an advisor can be invaluable in creating that competitive environment that attracts buyers and drives up your sale price. In addition, an advisor will aid in all the transaction negotiations and help ensure the appropriate stock options and rollover equity are included in the deal. Learn more reasons why you should work with a healthcare M&A advisor in this column by fellow VERTESS team member, Bradley Smith.
6. Identify your ideal partner
If you feel it's time to grab that first bite of the apple and your organization is ready to scale with the right plan and the right team, think long and hard about what the ideal buyer looks like. Is it a financial partner? Do you want a strategic buyer who will make your company part of a larger competitor's organization? VERTESS's Alan Hymowitz recently discussed the three predominant healthcare buyer types and the challenges associated with completing transactions with these buyers in this column.
In most scenarios where owners want to stay on with their company and cash out even bigger in a few years, the financial buyer tends to be the clearer path forward. This is not to say a strategic partnership cannot work. In some cases, it's the right decision. However, when you are looking to drive the organization beyond your current capabilities, someone who is going to invest quickly into the company and target its key needs for growth tends to be the right partner.
This is also an area where a healthcare M&A advisor can prove very helpful. Most advisors, especially ones specializing in your line of business, have extensive resources and "rolodexes" of potential buyers and can quickly help you cast the right, wide net to initiate discussions with high-quality, potential buyers.
7. Fish or cut bait
After going through the processes discussed thus far, which should help you gain a better understanding of your company, its leadership, and your potential paths forward for sale or other type of transaction, it's time to make a decision. As the owner, you will want to do what is right for you and the future of your company, including your team and its customers. If you decide to proceed with pursuing a transaction, the work you have put in should help ensure a more successful outcome. If you feel it's best to wait a year so you can better get your house in order, you will be in an even stronger position when the time is right to proceed.
Understanding Your Healthcare Transaction Options
Selling your "baby" can be emotional but exciting as well. Following the steps above and better understanding your healthcare transaction options will put you in a much stronger position regardless of whether and when you sell.
If you have questions about pursuing a sale or recapitalization, reach out to our team of expert healthcare M&A advisors at VERTESS. We'd love to learn about your business and talk about how we can work together to achieve the best path forward for you and your company.
Gene Quigley
For over 20 years I have served as a commercial growth executive in several PE-backed and public healthcare companies such as Schering-Plough, Bayer, CCS Medical, Byram Healthcare, Numotion, and most recently as the Chief Revenue Officer at Home Care Delivered. As an operator, I have dedicated my career to driving value creation through exponential revenue and profit growth, while also building cultures that empower people to thrive in competitive environments. My passion for creating deals has helped many companies’ platform and scale with highly successful Mergers and Acquisitions.
At VERTESS, I am a Managing Director with extensive expertise in HME/DME, Diagnostics, and Medical Devices within the US and international marketplace, where I bring hands on experience and knowledge for the business owners I am privileged to represent.
We can help you with more information on this and related topics. Contact us today!
When the time comes for you to sell your durable medical equipment (DME) company, there will be a lot of work required to go from putting the company on the market to completing the transaction. But if you want that sales process to go smoothly, there's a good deal of work you'll want to complete before you start.
What does it mean to get one's house in order concerning the sale of a company? It boils down to your business functions. Owners of a business typically do not undertake deep dives into their financials and performance, but that's what a prospective buyer will do right off the bat. Owners need to put themselves into a buyer's shoes and assess the balance statement, key financial metrics, employee and payor contracts, assets, processes, the legal structure of the business, and other areas to see what stands out — and not in a positive way. What might be a potential red flag to a buyer? What might look like it could be a major hassle for a new owner or lead to difficult questions during the due diligence process of a sale? For example, are you over-indexed on operating expenses? Will buyers ask why your opex exceeds 40%?
Once you have completed this assessment, work to fix those issues — especially the low-hanging fruit — to the best of your ability before you come to market. Doing so will allow you to hedge off some of those questions and ultimately make your company more presentable.
2. Tell your growth story
When a buyer is considering your company, they're going to want to see that you're profitable. But more importantly, they're going to want to understand how you can become more profitable, i.e., What is the runway for you to grow? As you are preparing your company for a sale, develop the story that will explain how you are going to grow over the next 3-5 years. What's going to differentiate you in the industry? How are you going to stay ahead of trends?
This is all very important. I've been part of the leadership team for several companies that sold, and for each of them I was the sales or growth leader. When we developed our confidential information memorandum (CIM)*, most of the time was focused on where we expected we could grow. What was our secret sauce? How could we expand sales? Expand payer contracts? How were we going to buy smarter to reduce expenses? A strong growth story is going to be the difference between a 3x and 5x multiple*.
*Note: If the concept of a CIM or multiple is new to you, I recommend reading this recent column by my colleague Rachel Boynton. It defines CIM, multiples, and other M+A terminology you should know.
3. Put together the right team
For most DME company owners, the sale of their company will be a once-in-a-lifetime experience. The sale is the conclusion of years of hard work and sometimes even some blood and tears. It's not surprising that some owners are on the fence about whether to bring in outside help for the transaction because of the costs involved in engaging an advisor and other support, which is money that comes out of the seller's pocket.
But just as most owners had help setting up their company, they will be best served getting help selling their company. The right assistance can not only translate into a higher sales price, but also avoid costly missteps, mistakes, and a prolonged transaction. Experience shows that an outside advisor, whether it's someone from VERTESS or another healthcare M+A firm, helps owners better identify and address challenges, take advantage of opportunities, emphasize what makes the company special, and create the competition for the sale that drives up the multiple.
A traditional operator will likely not know how to put a CIM out to market or get it into the right buyers' hands. Owners may have a few people in their index they think may have interest in acquiring the company, but taking this approach means you're missing out on the opportunity to cast the wider net that creates the competition you want and brings in different types of buyers.
In addition to an M+A advisor, other members of the transaction team should include an accountant and legal advisor with healthcare transaction expertise. The right team will make the process go more smoothly and better help ensure the sale reflects the years of work and investments that have gone into the company.
4. Fully understand your vulnerabilities
This ties back to getting your house in order. You must understand where your company is vulnerable. Will any of your contracts soon be vulnerable to compression? How are you going to stay ahead of that development? Is competition coming out with a new product that may put you in a less competitive position moving forward? Is there anything under the hood of the company that could be considered a weakness?
Once you identify your vulnerabilities, you'll want to do one of two things. If you can fix a vulnerability, you should. If it's not a simple fix, at least develop a strategy for how you will overcome it.
5. Understand your value from the buyers' perspective
Nearly every owner I've worked with contemplating a sale has a price they firmly believe they should receive for their company. This figure may be achievable, but there are a lot of factors that will influence the final sale price — and the potential for the price to end up higher than what a seller believes is fair and possible.
To gain a better understanding of how a sale may play out, owners will want to start thinking about their likely buyers, what these buyers are looking to get out of the business, and how these buyers may deploy the business following the transaction. Is one potential buyer a private equity platform looking to add more companies? Will the seller's company be an additive to other companies a firm currently owns? Might the acquisition be a strategic buy?
In these and other scenarios, owners should ask themselves: What's the value your company brings to potential buyers? What are the buyer's immediate needs? Longer-term needs? Understanding what the buyer is looking for is helpful in determining how to best present the company in your CIM. You want to position your company to deliver on those needs so you can secure a price that matches or even exceeds what you have calculated before the sales process begins.
Putting yourself in buyers' shoes also helps establish more realistic sale expectations. In some instances, this will require an owner to come to terms with the fact that their company is not worth what they hoped or expected. Determining what a buyer will and will not value and what your company is likely to sell for ties back to assembling your transaction support team and leveraging their guidance and expertise.
6. Keep your management team focused on business and not the deal
A company's management team will be involved in the sale. They will be a part of the CIM development process and helping with due diligence. But one of the worst decisions an owner can make is to have their management team focus so much on the deal that they take their eye off the business. You want to make sure your executive team and the management team underneath them are involved in the transaction as much as necessary, but their day-to-day focus should be on delivering your services, growing the business, and executing your strategic plan. The last thing you want is your company's performance to fall off as you are working to complete a sale.
7. Consider post-deal involvement
A final essential step to take before bringing your company to market is to consider the role and level of involvement you're looking for in your company following its transaction. That's going to greatly determine the type of buyer you want to target. Do you want to fully exit? If so, understand that this may turn away some buyers who are not interested in investing in finding and onboarding a new CEO or any other executive position you hold.
If you want to stay on with the business, make sure the buyer understands the position you are looking for following the sale. Is it a board position? Do you still want to be in an operator position? Do you want to give up full control? Half control? These are questions to firmly answer to before initiating the transaction process.
Do the Work, Reap the Rewards
When you conclude that it's time to sell your DME company, you may be eager to start the sales process and find out what your business is worth. But rushing into the process is going to do more harm than good. By allocating the time and resources to effectively complete the steps described above and others recommended by your transaction team, you will strengthen the performance and appearance of business, become more attractive to buyers (and likely attract more buyers), and should end up securing a sales price that rewards you for building a successful company.
Volume 10, Issue 23, November 7, 2023
Selling your healthcare business is a significant milestone that can bring substantial financial rewards, but it's also a complex endeavor filled with challenges. Maximizing your results in a business sale often requires the expertise of a mergers and acquisitions (M+A) advisor.
In this column, I will explore how owners of healthcare businesses can leverage the full potential of M+A advisors to best ensure a successful and profitable sale of their companies. We'll cover essential things to know, steps to take, and strategies to follow to make the most of this important partnership.
Understanding the Role of a Healthcare M+A Advisor
Before delving into the specifics of maximizing your results, it's crucial to know the role of a healthcare M+A advisor. These professionals specialize in facilitating business sales, mergers, and acquisitions. They provide strategic guidance, conduct due diligence, identify potential buyers, negotiate deals, and handle legal and financial complexities. Their expertise can greatly improve the outcome of your business sale.
Selecting the Right Healthcare M+A Advisor
Choosing the right M+A advisor is a critical decision. Look for professionals with experience in your healthcare industry, a proven track record, and a network of potential buyers. Additionally, the advisor's communication style and approach should align with your business values and objectives. Building a strong working relationship is key to a successful partnership.
Defining Your Objectives
Before you can maximize results, you must establish clear objectives for your business sale. Are you seeking the highest possible sale price, a quick transaction, or specific terms that ensure your business legacy? Discuss these objectives with your M+A advisor to align your vision with the sale strategy.
Crafting a Winning Strategy
Your healthcare M+A advisor will work with you to develop a tailored strategy for your business sale. This strategy should consider market conditions, competition, and the unique selling points of your business. It may involve identifying potential buyers, positioning your business in the market, and optimizing your company's financial performance prior to a transaction.
Target Identification and Screening
The M+A advisor will assist in identifying potential buyers or investors. They will conduct a rigorous screening process to determine that potential acquirers are genuinely interested in your company and financially capable of acquiring it. This step helps you avoid time-wasting negotiations with unqualified parties.
Marketing Your Business
Marketing your business to potential buyers is a crucial aspect of maximizing results. Your M+A advisor can create a compelling business profile and marketing materials that highlight your business's strengths and potential. The advisor will also employ various marketing channels to reach a broad audience.
Negotiating the Deal
Negotiations play a pivotal role in the outcome of your business sale. Your healthcare M+A advisor's experience in deal negotiations can help secure favorable terms. They will work closely with you, so the deal aligns with your objectives and provides the best possible return on your investment.
Performing Due Diligence and Risk Mitigation
A thorough due diligence process is essential to a successful sale. Your M+A advisor will guide you in preparing all necessary documents and information. They will also help identify and mitigate potential risks, thus increasing buyer confidence and reducing the likelihood of last-minute surprises.
Achieving Legal and Regulatory Compliance
Navigating the legal and regulatory aspects of selling your business can be daunting. An experienced healthcare M+A advisor will keep you on the right side of the law by ensuring all necessary permits, contracts, and licenses are in order. Compliance not only reduces the risk of complications but also enhances the attractiveness of your business to buyers and the likelihood that a sale can proceed as planned.
Emphasizing Communication and Transparency
Effective communication between you and your M+A advisor is crucial. Regular updates on the status of the sale, feedback from potential buyers, and information on current market conditions are vital for making more informed decisions. Transparency builds trust and keeps you aligned with your advisor's strategy.
Tracking and Measuring Success
Maximizing your results necessitates measuring success. Define key performance indicators (KPIs) that align with your objectives and track progress throughout the sale process. Regularly assess the performance of your M+A advisor and be prepared to make adjustments if needed.
Executing Post-Deal Integration Planning
The work that needs to be completed doesn't end with the sale. Your M+A advisor can help you plan for post-deal integration, ensuring a smooth transition for both parties involved in the transaction. This step is often underestimated, but it can significantly affect the long-term success of the acquisition.
The Right Healthcare M+A Advisor Can Make All the Difference
Selling your business is a complex journey, but with the right healthcare M+A advisor and a strategic approach, you can maximize your results and return on your investment. Remember to select an advisor with applicable expertise and build a strong partnership. Defining clear objectives, crafting a winning strategy, and executing a comprehensive plan are keys to a successful business sale. By working closely with your M+A advisor, maintaining open lines of communication, prioritizing transparency, and assessing progress, you can achieve the best possible outcome when selling your business
Volume 10 Issue 11, May 23, 2023
The M+A industry regularly reminds us that it’s tough to sell any business, including healthcare companies. Published data from the likes of exit planning experts, investment banks, and trade associations suggest that somewhere between only 10-30% of businesses complete transactions.
Why such a dismal success rate? The typical reasons are logical enough: sellers are not emotionally ready to leave their “baby”; poor financials mean there are few interested and qualified buyers; the seller’s local service/product is not scalable; and/or their company is facing unknown risk in an evolving marketplace.
Skilled healthcare M+A advisors can help sellers build value or manage the most challenging transactions, which is why we trumpet these statistics. But it’s very important to understand that there are serious problems with the data itself.
Here are three reasons data about successful healthcare M+A transactions may be missing the point.
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1. The data used is based on a poor sample. Interviews by VERTESS with multiple competitors in the healthcare M+A marketplace reveal they reported very few or none of their closed healthcare transactions to an independent database during the past decade. While sources such as G4 Data and Pitchbook are trying to address this situation, deal activity in the lower end of the middle market (less than $25 million revenue) is largely missing from the analyses noted above. How can we make decisions based on such questionable data?
2. Everyone transitions and transacts. Even when a healthcare company owner doesn’t use an advisor or investment banker, a transition eventually will take place. After all, healthcare business owners can’t live forever, so something will happen to their business even if the original M+A goal isn’t met. The business may be sold to a partner or other business colleague, the company may be passed on to a family member(s), pieces of the business may be sold as assets to another entity, and/ or the seller may close the business. In each of these cases, a transaction occurs and each of these transactions could be strengthened with advice and consultation from a healthcare M+A professional.
3. The 70-90% of business owners who do not use advisors are typically not included in the statistics. Such owners are the ones who would probably benefit most from professional advice and consultation. Why? They likely have significant room for improvement that can be cost-effectively addressed through building value, strengthening reporting, increasing market awareness, and undertaking other improvement efforts. Working with a healthcare M+A advisor to identify and capitalize on such opportunities can help healthcare owners better position themselves and their businesses for greater success and ultimately the best transaction possible.
Key Takeaway: Ignore the "Noise" and Focus on Your Opportunity
While considerable media attention is paid to industry predictions and reports, whether a transaction is successful will largely boil down to the specifics of the entities involved in the transaction. It's worthwhile for sellers and buyers to monitor headwinds and tailwinds, but when it comes time to consider a sale or acquisition, what will matter most is whether the transaction makes sense for all parties involved rather than what pundits and publications are claiming.
Working with an M+A advisor can help you cut through all this "noise" — including any inaccurate information circulating about — to determine what you should and should not focus on to best ensure you achieve your goal and buck the sup
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