Don't Make the Big Mistake I Did When Selling Your Healthcare Business

Volume 11, Issue 23, December 3, 2024

By: Christine Bartel, MBA/MHA, CSA

A few months ago, I joined VERTESS as a managing director. I became a member of this great team because I want to help healthcare business owners successfully sell their companies. I also want to ensure our clients do not experience what I did when I sold my business.

The Background

I graduated undergrad with a degree in economics with a premedical emphasis. My expertise was in the analysis of financial statements, largely of publicly traded companies. I worked for the S&P 500 for a little while but found myself lacking passion and was eager to find a career that would give me a more purpose-driven life. I decided to get into senior home health care. I held positions at a few impressive home care agencies and then decided in 2002 to start my own agency in Colorado. I believed I could provide senior home health care services to seniors in the state better than anybody else.

The belief in myself paid off. By 2008, through organic growth and small add-on acquisitions, my agency was generating about $8 million in revenues. We had three branch locations and operated from northern to southern Colorado. We were a top-tier agency providing the full continuum of senior home health care, which was highly attractive to buyers at the time.

While I wasn't interested in selling my agency, my hand was essentially forced due to a divorce. A buyer reached out and expressed significant interest in my agency. Representatives of the buyer, including its owner, flew to Colorado for a meeting at a restaurant airport. The buyer was prepared to generously reward me for the tremendous amount of work I had put into my company and the success we had achieved.

It seemed like we were heading to an outcome that would see me making the best of a situation I didn't want to be in. I handled all the negotiations with the buyer. While I had some previous experience with mergers and acquisitions (M&A), I was by no means an expert. This wasn't a concern at the time as I thought that the buyer had my best interests at heart, and everything with the acquisition of my agency would be done on the up and up. What can I say? I'm an eternal optimist.

Ignorance Is Not Bliss

My naivety came back to bite me. The buyer's attorney eventually took the lead in the negotiation process, and he was supported by an external accountant. Unfortunately, I didn't recognize that what had been a "human transaction" involving a buyer that seemed to prioritize my wellbeing became a deal all — and only — about numbers.

And the numbers weren't going to end up pretty for me. I received a good offer on paper, which combined what seemed like fair figures for cash, an earnout, and stock. I was working with a broker who was referred to me, but I didn't know this broker had represented the buyer. Same with the attorney who was recommended to me. These were clear conflicts of interest, but I did not discover them until after the transaction.

Right before we closed, the buyer said we should make a 338(h)(10) election, which I later found out can greatly harm a seller's finances due to tax implications. The buyer also included some carefully worded language in the contract with stock implications, which I missed, and my broker and attorney failed to discuss with me. The buyer's representatives said all the right things to keep me moving forward toward the sale. They said they wanted me to remain on for a year to help with the transition and would make up for any shortfalls through my salary.

In the end, my rose-colored glasses betrayed me. My stock ended being worthless, and I never received an earnout. Following the transition year, I walked away from my company with nothing except my initial cash.

That was devastating. I put my blood, sweat, and tears into that organization. I gave up time I could have spent with my family growing the organization — in part because I wanted to help more people through our services, but also because I believed the work would pay off financially and enable me to better support my family. While I was able to achieve the former, positively impacting many people's lives, I felt robbed of the latter.

The Lesson Learned

Where did I go wrong with selling my company? I don't want to put too much of the blame on my optimism and the belief that people are generally good. My work in the senior home health care space has shown me this is largely true. But the reality is that when it comes time to sell your company, you cannot afford assumptions. Buyers are looking for good deals, and some will try to take advantage of inexperienced sellers.

I recognize that where I went wrong was that I lacked good representation in the transaction. Engaging with the right M&A advisor, knowledgeable in home health, free of conflicts of interest, and whose responsibility was to have my and my company's best interests at heart, was the key to my receiving fair value for my company. During my sale, I did not have this kind of representation, and I paid the price.

This brings me back to my joining VERTESS. I'm in the last leg of my legacy. I have three grown children and one smaller child. I decided I wanted to finish my career doing purpose-driven work. Despite my success owning and operating home health companies, I was no longer finding joy from C-level operations.

I met with VERTESS' leadership and instantly knew that this was the right firm and right work for me. I had my doubts about a career in M&A because I had largely soured on these professionals due to my transaction experience, but the VERTESS team shows that not every M&A firm is only interested in getting deals to the finish line and earning commissions. The team is largely comprised of past owners and operators of healthcare business. We understand what it takes to grow a business, including making huge sacrifices, and what's required to get to a place where buyers are willing to pay a generous and fair amount for a company. We know the importance of finding the right buyer — one capable of making a good financial offer and who will help the business they are acquiring continue to grow and thrive.

We also understand that when it comes to transactions, the devil is in the details. A little mistake or oversight can jeopardize a deal or lead to an unfair outcome for a seller. We support one another at VERTESS and collaborate closely with the other members of a transaction team, like an attorney and accountant, to ensure no important detail is missed.

Most importantly, we are motivated to help our clients succeed. Our team has been in their shoes, which is why we follow our form of the golden rule: We do unto our sellers as we would want someone to do unto us. As you might imagine, this is very personal for me given what I experienced — and what I hope no one else experiences.

My story shows that choosing the right representation may be the most important step you take to prepare for selling your company. When that time comes, I hope you will reach out to VERTESS. We'd love to learn about you and your company's story and help provide the happy ending for your business that you deserve.

Christine Bartel, MBA/MHA, CSA

Before joining VERTESS, I served as a senior healthcare executive for 26 years. My expertise includes CEO and COO functions, which produce dramatic improvements in financial performance through acquisitions, joint ventures and, service line development. I am experienced in the full continuum of care, with a deep understanding of how new federal and state policies impact the bottom line. After working as a statistician at Standard & Poor’s Compustat and a financial analyst at Dun & Bradstreet Corp., I began a career in health care and, in 2002, started a home care services company in Colorado. Serving as the CEO, I supervised a staff of approximately 350 caregivers, established two branch locations in Colorado Springs and Fort Collins, and ultimately sold the company to a private equity firm in 2008. Since then, I launched an independent consulting practice that acquires underperforming health care entities, delivers strategic guidance and an array of management services to diverse healthcare organizations, facilitates with interim/long-term senior leadership operational turnarounds, joint ventures, facility expansion, service line development, and mergers and acquisitions. I also coach health system executives, physician groups, assisted living facilities, skilled nursing facilities, insurance companies, and post-acute organizations.

I earned my Bachelor’s Degree in Economics from the University of Colorado Boulder and an MBA from George Washington University. In 2012, I received my Certification as a Senior Advisor (CSA). Lifetime achievements include raising four beautiful children, hosting “Aging Independently with Christine Bartel” on CBS Noon News, and authoring “Redemption, The Christine Bartel Story.” I received the women-related Corporate Social Responsibility/Bronze Stevie Award in 2018, was featured on the Inc. 5000 list of the fastest-growing private companies in America (ranking 1908 out of 5000) in 2018, and was honored as the Female Executive of the Year/Gold Stevie Award Winner in 2017.

We can help you with more information on this and related topics. Contact us today!

Email Christine Bartel or Call: (303) 594-5565.