Your Primer to Healthcare Mergers and Acquisitions

Category: Exit Planning

Exit Planning
Planning for Partnership Problems: Why Your Business Depends On It

I have recently encountered a few situations where partners in a business do not agree on the current plan for the company, with one partner(s) is ready to sell while the other(s) is not. This is often a situation unanticipated by entrepreneurs when they decide to become partners in a business. This is not surprising. After all, the focus at the time of the partnership is usually the start of the business rather than its potential or eventual conclusion. Thus, there is rarely a conversation about the end game — the exit when one or all owners are ready to retire or move on to the next start of their career.

A business partnership where owners have equal stake in the company can lead to a plethora of problems from disagreements in operations to exit strategies. Whether you're just starting out or already functioning as a super team, it's never too early to discuss the "what ifs" for future decisions. But wait too long and it can't be too late!

Mike Gillette is a friend, colleague, and a lawyer and shareholder at Polsinelli (mgillette@polsinelli.com) who has helped many of my sellers transact. I asked him to share some insight from a legal perspective into how co-owners of a business should address issues that develop around disagreement about the future for the company. The following section summarizes his thoughts.

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Exit Planning, Healthcare Sectors
Medtrade Edition - Selling Your DME Business: How to Time the Market for an Exit

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.

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Exit Planning, Healthcare Sectors
The Story of My Sale: Spero Recovery

I recently joined VERTESS as a managing director. I'll be providing merger and acquisition (M+A) and consulting services primarily to the behavioral health and substance use disorder (SUD) treatment markets. Like many of my new colleagues, I previously owned and operated a company in the space I will be working in for VERTESS. But that's not all: I also have firsthand, personal experience with substance misuse.

In this column, I'll share a little about this journey with you, how it motivated me to open my company, and several of the key lessons I learned from the sales process.

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Exit Planning, Market Trends
How to Keep COVID-19 From Infecting Your Company's Value

The world of healthcare mergers and acquisitions (M&A) has experienced a significant rollercoaster these past two years, primarily due to the events of COVID-19. Before the pandemic locked down our communities, M&A, particularly in the health and human services space, was experiencing a significant increase in activity. This was caused by several factors. Among them: Existing organizations — or strategic buyers — were witnessing the benefits of growth through acquisition to compete with larger businesses and prepare for managed care, while private equity investors saw this field as one worth investing in. With an excess of cash reserves (i.e., "dry powder"), these private equity investors started spending.

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Exit Planning, Market Trends
Dialing for Dollars: What Sellers Must Know Before Answering the Phone

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.

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Exit Planning, Valuation
How You Can Increase the Value of Your Healthcare Company

Owners of healthcare companies, practices, and agencies often ask us how they can increase their businesses' market value. Buyers determine the value of a business based on return on investment and riskiness of the investment. Business owners create value by increasing the return on investment and decreasing the riskiness of ownership.

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Exit Planning, Healthcare Sectors
Selling Your I/DD Agency: Observations From an Industry Veteran

As you may or may not know, I have been an advisor to owners of provider agencies supporting individuals affected by an intellectual and/or developmental disability (I/DD) for more than 30 years. I am fortunate in that I love this work. It is enormously gratifying to earn a living by helping others reach their goals. I am able to help business owners reach their financial goals and buyers achieve their growth and value-creation goals while improving the lives of employees and clients alike through the right transaction.

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Exit Planning, Healthcare Sectors
Difficult Conversations: Explaining the Sale of Your Human Services Company

I was recently speaking with one of the sellers I represented about the sale of his provider agency. I asked him what he thought was my most significant value during his long selling process. Without skipping a beat, he said, "'The emotional support you provided to me." He explained that it was helpful to talk with me when things got stressful or even a bit scary since I had been through the process of selling my own company.

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Exit Planning, Healthcare Sectors, Valuation
What's the Value of Your Home Healthcare Agency?

The only constant for home healthcare agencies is change. For many owners of agencies, change is both demanding and fatiguing. At some point, owners start thinking about exiting their company. Some owners elect to pass ownership down to their adult children. Some stop taking on new clients/patients and simply close their doors. Others seek to sell their company in the marketplace. This column is written for those owners considering selling in the marketplace.

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Exit Planning, Healthcare Sectors
Don't Go It Alone: One Map That Shows Why IDD Owners Need M&A Advisors

The above is a map put together by our team at VERTESS. This map identifies some of the larger intellectual and developmental disability (IDD) competitors in the country, the states in which they do business, and their owner or ownership structure. Every healthcare industry uses this tool. These maps provide valuable insight into the competitive landscape of the respective industries. They are also a way of demonstrating why a healthcare business owner would be wise to partner with a merger and acquisition (M&A) advisor when the owner decides it is time to begin pursuing a sale of the company. Along with business size and service lines, buyers are often categorized by the geographic markets in which they're seeking acquisitions. Advisors should be aware of who is looking for acquisitions where.

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Exit Planning, Healthcare Sectors
Selling Your Human Services Company: 8 FAQs and Their Answers

I often receive calls from owners of human services companies who say something along the lines of, "I don't know what I don't know" concerning selling their company. What's important to understand is that it's okay not to know everything about selling a company. It's a complex process, which is why most successful sales involve a team working together toward a common goal.

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Exit Planning, Market Trends
'Fundless Sponsors': Separating the Good From the Very, Very Bad

The concept of a "fundless sponsor" started in the 80's. Recognizing that this name might carry a negative connotation, it was changed to "independent sponsor" — a more palatable moniker. In a similar vein to independent sponsors is a "search fund," but for the purposes of this article, we will lump them together.

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