By Tom Schramski, PhD, CM&AA
Volume 2 Issue 5, March 3, 2015
One of the biggest challenges in the healthcare middle market is finding accurate data on M+A transactions, including deal specifics like multiples of adjusted EBITDA. This issue is even more pronounced in the lower middle market where hundreds of companies of $10-50 million revenue are sold each year.
VERTESS has recently forged a relationship with GFData, winner of 2014 AMAA Middle Market Thought Leader Of The Year Award, to address this concern. GFData provides detailed information on successful transactions between $10 and $250 million across the country, including healthcare and related services/products, in the $10-50 million lower middle marker segment. What is unique about their approach is that they confidentially collect data on various aspects of each transaction, allowing us to dive much deeper into the truth of each deal with like comparisons to similar transactions.
Based on their data for the fourth quarter of 2014, this is what we believe we have learned:
What does this data mean for you? If you are looking to transition there remains strong buyer interest in multiple healthcare verticals with many financing approaches available. Buyers are also becoming increasingly sophisticated and are looking for more creative options for expansion (e.g. replication of their own service delivery models via de novo activity) when they cannot find an acceptable acquisition.
There also appears to be pent up seller interest in the Baby Boomer population who are looking to time things right. Like all economic trends, there are better times than others and we believe that today’s favorable conditions will not last forever. A decision to transact should incorporate this macro view balanced with your personal goals and objectives.
Transcending these factors is an age-old truism: if your business performance is strong and sustainable it will always be easier to find a buyer or a partner than if this is not the case. You may find the one-in-a-million product or secret sauce, but most great transactions come from keeping your eye on the ball and aligning your human and financial resources behind that effort.
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.