Is it possible for the owner of a durable medical equipment (DME) company to time the market to maximize an exit? That depends. Successful transactions come together when the following three conditions are in sync:
1. The business is ready for external scrutiny.
2. The owner is personally ready for a transition.
3. The timing of the capital market (macro) and the DME market (micro) are favorable.

The seller and a merger and acquisition (M&A) intermediary can influence control over the first two of these conditions. The third condition, on the other hand, requires a bit of luck. Let's take a closer look at these conditions and their importance in a successful transaction.

Does this sound familiar: The phone rings. You answer, and on the other end is someone who tells you that they represent a company eager to purchase your healthcare business.
These kinds of calls are happening every day, with some businesses receiving multiple calls a week. On the surface, these might seem like good calls to receive. After all, if someone is interested in buying your business, you must be running a good operation. And if you've been considering whether it's the right time to sell your business, such a call might be an avenue forward for you.
But seller beware: While it's good to answer the phone and hear what's presented to you, moving ahead on a transaction with a cold caller could be fraught with risk. Let me explain why.

As 2020 races to a close (or grinds slowly to the bitter end, depending on your viewpoint), the world is ready to turn the calendar page to new a year and, hopefully, a brighter season for all of us. Radical and sudden change is rarely greeted with open arms, and this has been a year of struggle and "new normals" for everyone. The VERTESS team would like to share some closing thoughts on the indelible mark 2020 has left on the healthcare market and what we might look toward in 2021.

Volume 7 Issue 20, October 13, 2020 by Jeffrey S. Baird, Esq., Brown & Fortunato, P.C. Two common questions I am often asked by owners of healthcare businesses considering whether to sell their companies are: 1) If I sell my business, can I still get audited? 2) If I do get audited after selling my […]

"Have you signed an LOI yet?" This may be one of the most important questions at the outset of a healthcare transaction. Many times, the parties believe a handshake agreement can be magically transformed into a comprehensive and binding contract without change or disagreement. Inevitably, however, the terms of the handshake agreements shift—and continue to shift—until one party surrenders. That is, unless a letter of intent, or LOI, is entered into by the parties.

While home medical equipment (HME) providers are well-recognized for adapting to change, especially as insurance companies shift requirements and the healthcare industry matures, what happened with COVID-19 blindsided everyone. Planning and projections went out the window. Now, we're trying to settle into a "new normal" that keeps changing.

The VERTESS team of mergers and acquisitions advisors have seen many successes in their careers. We've also witnessed some failures when representing healthcare owners who could not sell their businesses. For some of these owners, their window of opportunity was lost for good. Fortunately, for others, they were able to eventually complete a transaction, but often learned some difficult lessons in the process.

Financial buyers, particularly private equity groups (PEGs), are currently in heated battles with strategic buyers for quality durable medical equipment (DME) deals. Well-run, well-managed DME companies are at the forefront of such intense competitions as they seek all-time-high valuations from financial and strategic pursuers alike.

There's some good news for owners of durable medical equipment (DME) and home medical equipment (HME) businesses: The transactions market (i.e., mergers and acquisitions) is not too hot and not too cold, but just right at the moment.

With over 60 combined years’ experience in the healthcare marketplace, we have seen many successes and some failures when representing healthcare owners who could not initially sell their businesses. In these latter examples they learned a hard lesson and, fortunately in some cases, were able to eventually transact.

Here are seven reasons why they encountered failure the first time around.

Today, families provide nearly $40 billion of uncompensated pediatric home health care (parents are believed to lose about $3,200/year in income when caring for a sick child), though this picture is rapidly shifting with the expansion of Medicaid, the increasing influence of managed care organizations (MCOs), and the Centers for Medicare & Medicaid (CMS) emphasis on providing pediatric care in client homes. This accelerating change offers an opportunity for home health care providers to enter and/or increase market share in an area of demonstrated need.

Several years ago, DME competitive bidding was instituted by Medicare and the impact has been dramatic. Many smaller DMEs that could not successfully compete sold their assets, restructured their business, or simply closed their doors.

Other DME companies, however, saw an opportunity to be exploited. In our national DME merger and acquisition practice, we've seen a number of success stories of companies that have both survived and thrived in this increasingly competitive environment. Here's what they did.