Your Primer to Healthcare Mergers and Acquisitions

Category: Exit Planning

Exit Planning
Evaluating M&A Advisors: 5 Questions Healthcare Business Owners Should Ask

Thinking about selling your healthcare business? Then you undoubtedly have many questions. And if you've looked to Google to get answers, you've probably found that your searches have yielded divergent, overly complex, or abnormally vague responses. Why can't you find clear answers?

It's because the answer to most of your questions is: It depends. There are many factors that influence the sale of a healthcare business. But that doesn't mean your questions aren't worth asking. There are no bad questions to ask when contemplating one of the biggest — if not the biggest — decisions of your career. To get answers to your questions, don't turn to Google. You'll want to turn to an M&A expert. Getting clear and correct answers to your questions is one of the many reasons why having an M&A advisor will make a big difference as you proceed with a sale. But first you need to find the right advisor.

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Exit Planning
Selling a C Corporation: Key Tax Implications You Should Understand

Depending on your healthcare company's corporation type, there are different tax implications you will want to be aware of long before you are ready to sell your business. One type of company that brings with it tax implications that often catch owners off-guard or create challenges when owners are ready to pursue a transaction is C corporations (C-corp).

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Exit Planning
Improving Integration Success Following a Healthcare Transaction

At VERTESS, we often get a first-hand look at the good, the bad, and the ugly of post-transaction integration. No two healthcare deals are transacted the same, and no two deals will ever integrate the same. The simple truth is integration is just as much a process as completing a merger or acquisition — and likely a lengthier one as well.

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Exit Planning, Healthcare Sectors
Preparing to Sell Your DME Company: 7 Steps to Take Before Proceeding

When the time comes for you to sell your durable medical equipment (DME) company, there will be a lot of work required to go from putting the company on the market to completing the transaction. But if you want that sales process to go smoothly, there's a good deal of work you'll want to complete before you start.

Here are seven of the key steps you should take that will better help ensure your company sells for a fair price and to the right buyer.

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Exit Planning
Healthcare Mergers and Acquisitions: Understanding M&A Terminology

If you are looking to acquire or sell a healthcare business, something you will quickly find is that there is a lot of terminology and lingo specific to mergers and acquisitions (M+A). M+A has its own diverse vocabulary. The more you understand these terms, the easier it will be to engage in the transaction process. Even a surface-level understanding of key concepts will at least provide a foundation to better participate in conversations and ask more in-depth questions.

Below is a list of some of the most common terms and acronyms you are likely to encounter in your discussions and review of documentation. If you come across an unfamiliar concept, do not hesitate to ask one of your M+A partners, such as an advisor like VERTESS or your healthcare attorney, to explain it to you. During the M+A process, ignorance is definitely not bliss.

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Exit Planning
Underappreciated Key to Healthcare Acquisition Success: Staff Retention

Acquisitions are increasingly a way of life in the healthcare industry. Yet one of the most essential factors for achieving success following a sale that is sometimes never discussed or only brought up toward the end of the transaction is staff retention.

Why is retention so important? Before we can answer this question, it's helpful to gain an understanding of how acquisitions may be perceived and experienced by a healthcare organization's staff.

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Exit Planning
Selling Your Healthcare Business: The Buyer's Perspective

them telling me they’ve heard of similar companies selling for extraordinarily high prices. Those prices are often expressed as a multiple of revenue or earnings before interest, taxes, depreciation, and amortization (EBITDA). They’ll apply a multiple to their business and tell me they’d be happy to sell at that price. While this is not an unreasonable approach, oftentimes the multiples they’re using are not realistic.

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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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