Volume 4 Issue 12, June 6, 2017
The M+A industry regularly reminds us that it’s tough to sell any business, including healthcare companies. Chris Sider of the Exit Planning Institute (EPI) recently estimated that only 20-30% of marketed businesses end up selling. BizBuySell’s 2017 national report suggests that only 20% of listings sold in 2016. Other investment banks and trade associations believe that only 10-15% of businesses complete transactions.
Why such dismal statistics? The typical answers are logical enough: sellers are not emotionally ready to leave their “baby”; poor financials mean there are few qualified buyers; the seller’s local service/product is not scalable; and/or their company is facing unknown risk in a shifting marketplace.
Skilled 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 the healthcare M+A industry may be missing the point:
It is said that in the absence of fact, a firmly held belief will suffice. But an understanding of the facts ... in this case the inaccuracy of the statistics ... can help healthcare business owners better position themselves for success in whatever transaction eventually does take place. The statistics may never catch up with reality, but understanding that and reframing the opportunity will be beneficial to sellers, buyers, and advisors.
Tom was the Founder and Managing Partner of VERTESS. He was a Certified Merger & Acquisition Advisor (CM&AA), consultant, and Licensed Psychologist with over 35 years of very successful national experience in the healthcare marketplace, including co-founding and building a $25 million behavioral health/disabilities services company. Tom represented sellers and investors across the healthcare spectrum and was recognized for his executive leadership in the 2005 Entrepreneur of the Year issue of Inc. Tom passed away in December 2018.