By Teresa Gonzalo, PharmD, PHD, MBA, CM&AA
Volume 4 Issue 21, October 10, 2017
From time to time I am asked the following question: Why should I hire a specialized merger and acquisition advisor or investment banker for my healthcare company? A simple answer would be, because it's a win-win situation for all the parties involved. A more complete “why” can be found in the following reasons:
- Leveraging experience - A healthcare M+A advisor generally has experience in representing companies in various healthcare verticals and will help the healthcare business owner prepare for the process with insights about the owner’s unique market.
- Improving the selling process - The selling process is filled with complex and multiple tasks that are overwhelming and often underestimated. Simultaneously, the healthcare business owner is typically busy running their business, so hiring a qualified advisor will smooth the transaction process while ensuring a high return on investment. There are always obstacles and bumpy roads in the process of selling; a savvy advisor helps the seller to drive through them to secure a successful agreement with a buyer or investor.
- Maximizing business value– A healthcare M+A advisor will be able to market the healthcare company to more targeted buyers and this will often lead to more high-quality options for the seller. More value could mean creative strategic partnerships, maintaining the owner´s legacy, retaining a core management team, and higher price and/or better terms in the definitive agreement.
- Integrating knowledge into marketing - Effective healthcare M+A advisors integrate their knowledge of a specific healthcare vertical into their marketing approach. Utilizing established industry relationships and networks, the healthcare M+A advisor can connect sellers with buyers and investors that have the highest appreciation for the seller’s market segment and potential value.
- Showcasing value – A successful advisor knows what financial analysis and presentation will be most meaningful to potential buyers. As a result, they will make sure that marketing features a professional financial analysis and contributes to the highest valuation.
- Presenting a complete picture - Skilled M+A advisors generate a Confidential Information Memorandum (CIM) (aka “the marketing book”) that is sensitive to local market dynamics as well as larger healthcare market trends. The completeness of the CIM is usually related to the healthcare M+A advisor’s understanding and experience in the field.
- Managing the sales process – Competent healthcare advisors will manage a sales process in which various buyers are screened by level of interest, commitment, and financial qualification to complete a transaction. Within their networks, healthcare M+A advisors often access unique market intelligence to assist them in their representation.
- Closing the deal - Healthcare advisors often know about unique, market-related nuances (e.g. transferability issues for transferring Medicaid contracts) that will help with the final negotiation of deal terms, guiding the business owner through escrows, non-compete or interim management agreements, and other critical decisions.
The ninth reason is a composite of the above in a time of much turbulence and opportunity in today’s healthcare marketplace – delivering value. An accomplished healthcare M+A advisor often brings value that far exceeds the fee while reaching the seller goals that precede the journey.