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Of the thousands of conversations I have each year with buyers and sellers of healthcare-related businesses, very few recognize the financial acronym EBITDA.  This is understandable because many health-care business owners began their companies out of interest in a particular field or passion, and less on the ultimate pricing of their business for an exit…


Valuation And Pricing

Not long ago I had the following initial conversation with a small business owner: Owner: I had my business evaluated by a professional valuation expert. He told me my business was worth $2,500,000. AHC: I understand. When we thoroughly reviewed your company, including financial results over several years, we also considered all market trends and…


Thoughts About Perceived EBITDA Adjustments

Earnings Before Interest Taxes, Depreciation, and Amortization (EBITDA) is a common term used in healthcare transactions.  Why?  Because it is a rough estimate of operating cash flow that can help sellers and buyers to price or value a business in an existing market. EBITDA is normalized or adjusted because owners of healthcare businesses, especially those…


The Value/Price Dilemma

A seller of a healthcare business is looking to maximize the value of the transaction from a personal and financial perspective.  The complexity of maximizing value is what leads to the value/price dilemma. When sellers initially seek a valuation of their business the nature of the valuation depends on the source of the valuation.  Whether…


7 Key Ingredients for Today’s New Value

While some things never change in established healthcare business (e.g. operating profitability is necessary 99% of the time) there have been some shifts of emphasis.  At the foundation is an expectation that a business will have a sustainable future, so that a new owner will generate at least a modest return on investment in a…