Your Primer to Healthcare Mergers and Acquisitions

Category: Exit Planning

Exit Planning
Choosing a Healthcare M+A Advisor: 6 Questions To Ask Yourself

So you're thinking about selling your healthcare business. Aside from starting your company, this might be the most important step you'll take in your career. The majority of healthcare sellers will be involved in an M+A transaction once, so there is only one chance to get it right. 

Getting it right typically involves working with the right healthcare advisor/broker. This person can help you find prospective buyers, identify the right buyer for you, and successfully navigate the waters of the transaction — which will likely be choppy at times — from beginning to end. 

To help you make a sound choice of a healthcare M+A advisor, here are some questions to ask yourself as you interview prospects.

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Exit Planning
You Just Sold Your Healthcare Business. What's Next?

Congratulations!  You’ve just sold your business, completing an exhausting period spanning many months.  The process was made easier thanks to the support of an experienced healthcare M+A advisor, but you’re still relieved it’s over.

Yet, a question lingers in your mind: What do you do now?

This is a common experience for many sellers. After all, during the sales process, owners are often fixated on the day-to-day operations of their business or practice, negotiations with the buyer, valuation, and completing the sale. Little time was spent thinking about issues like:

Cleanup/follow-up issues that must be addressed.
The role, if any, you’ll have in the future success of your former business/practice.
How you can limit your future liabilities.
How you can help retain customers/patients and employees.
What becomes of your life post-closing.

Your post-sale experience does not need to be filled with such uncertainties.  Let’s look at what you can do, with the continued help of your M+A advisor, to make the transition from business owner to non-owner as simple and comfortable as possible.

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Exit Planning
Confidential Information Memorandum (CIM): Its Key Role in a Sale

There's the expression, "You never get a second chance to make a first impression." For many healthcare business owners thinking about selling their company, the first impression they may personally make on prospective buyers will come from a confidential information memorandum (CIM). And if that CIM doesn't represent the business in a professional, positive, and transparent manner, the owner may not get a chance to receive a fair offer.

What exactly is a CIM? It's the document used to market your business to potential buyers. It may go by other names, including a pitch deck, investor deck, the "book," or confidential information presentation (CIP). The document is typically called a CIM when used in the sale of a mature business and a pitch deck for startups.

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Exit Planning
Accelerating Healthcare Growth Through Acquisition or Recapitalization

Many small healthcare business owners struggle when they achieve a certain size or revenue stream. While these owners may see an opportunity to scale, there are challenges: They still have the "mom-and-pop" ideology (i.e., small company mentality) and their organization is not ready or capable of scaling up. This can be a frustrating experience for an owner. They feel their company can do so much more business, yet they lack the capital, know-how, technology, and/or experience to transform their organization from a small business (e.g., $20 million in revenue) business to a much larger business (e.g., $100 million in revenue).

Such a situation is risky for a business owner. If the owner attempts but struggles to grow the revenue and/or EBITDA of the company, this could greatly devalue the business in just a few years. But that doesn't mean owners should abandon their vision for growth. Rather, they may want to explore a sale or recapitalization.

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Exit Planning
Considering Selling Your Healthcare Business? Please Don't Do This

In this column, I want to talk about an alarming and growing trend — one that's leading to healthcare business owners getting paid much, much less than they deserve for their company or other potentially disastrous outcomes.

This trend concerns owners selling their companies to cold callers.

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Exit Planning, Valuation
Preparing Your Healthcare Company's Financials for an Exit

During the healthcare M+A process, the benefit of accurate financials cannot be understated. Financial reporting is the foundation on which your business is valued, and meaningful data presented in an organized fashion can lower a buyer's perceived risk. This likely means more money in your pocket on the closing date.

Yet, it is an all-too-common occurrence to see frustrations arise as a healthcare business owner works through the financial due diligence process. The lists are exhaustive, the requests elaborate, and the stakes high. By taking a few steps, even 3-6 months before you go to market, the due diligence process can be simplified in an impactful way. Sailing through financial requests allows an owner's focus to be rededicated to other, equally important parts of the sale process.

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Exit Planning, Market Trends
Perspectives on Selling Your Healthcare Business in the Coming 24 Months

In this SalientValue column, I'm going to touch on a number of points I hope healthcare business owners will find helpful as they consider the current position of their companies and plan for their futures. There are warning signs ahead, and having been through the ups and downs of various business cycles, I'd like to highlight some concerns and share some recommendations.

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Exit Planning
Thinking of Exiting Your Healthcare Business?: Planning the Perfect Exit

Numerous books, articles, webinars, and other media provide detailed exit planning strategies for healthcare business owners.  This article aims to provide owners with a concise primer on key actions to take and essential questions to answer that can help better prepare themselves and their healthcare businesses for an eventual exit.

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Exit Planning
10 Healthcare Transaction Deal Killers - and How to Avoid Them

Two of the most frequent questions sellers of healthcare businesses ask VERTESS Healthcare Advisors are, "What can go wrong? How can I prevent my deal from falling apart?" Some deals are simply destined to fail, whether it be because a buyer or seller changes their mind or the parties come to an impasse. But then there are those potential deal killers that can be avoided.

Based on some recent experiences, my colleagues and I have compiled 10 reasons deals have had the potential to fall apart and offer recommendations for what you can do to reduce the likelihood that your deal experiences an unfortunate ending.

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Exit Planning
'Certainty of a Close:' A Crucial Healthcare M+A Factor

It may seem like a no-brainer that healthcare business owners who are about to embark on a transactional journey would have considered how likely a potential buyer is to actually facilitate the close. Yet surprisingly, this idea of "certainty of close" is often overlooked by would-be sellers in potential healthcare M+A transactions.

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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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