Your Primer to Healthcare Mergers and Acquisitions

Category: Exit Planning

Exit Planning
Where's My Cash? Dispelling A Common Misconception About PE-Backed Acquisitions

Physician practice owners are often surprised to learn how private equity (PE)-backed companies structure their acquisitions and the relatively small amount of cash paid at closing. It's significantly less than owners (sellers) expected.
Below is a simple breakdown of how the proceeds from a typical PE acquisition works. The selling price is generally paid in three parts. Understanding the timing of these payouts may influence when owners choose to sell their practices.

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Exit Planning, Healthcare Sectors, Market Trends
Why You Should Sell Your Business In 2019 (Part 2)

In this second part, three of our other managing directors discuss why owners of ambulatory surgery center (ASC), home and community services, durable medical equipment (DME), and home health should consider exiting their markets this year.

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Exit Planning, Healthcare Sectors, Market Trends
Why You Should Sell Your Business In 2019 (Part 1)

Consolidation in healthcare picked up steam in 2018 and shows no signs of slowing down in 2019. This trend, along with other factors, is placing great pressure on providers of healthcare services to address a critical question: Is this the year to sell?

For many providers, the answer should be simple: yes.

In this first in a two-part series, two of our Managing Directors speak to why pharmacies and intellectual or developmental disabilities (IDD) service providers should sell in 2019.

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Exit Planning, Healthcare Sectors
3 Things I Wish I Knew Before I Sold My I/DD Company

When my husband brought up the idea of selling our baby, I was completely unprepared. While we ultimately had a successful sale, largely because my husband had a great vision for a strategic buyer, there was a lot we didn’t know that could have produced more value in our transaction. Here are three key things that would have made a difference then, and certainly today.

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Exit Planning, Market Trends
7 Reasons Why Some Healthcare Businesses Don't Sell (At First)

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.

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Exit Planning
There Are No Unrealistic Expectations

There is an unfortunate term in the world of healthcare M+A intermediaries when they discuss a difficult, or even disastrous, transaction attempt: the “unrealistic expectations” of a potential seller. It is not uncommon for advisors to blame a failure on the seller’s resistance to adopting transactional expectations more in line with the “real world.” In my experience, this reaction misses the point and is a disservice to the client.

A more self-observant perspective considers the following...

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Exit Planning
8 Practical Strategies To Maximize Your Healthcare M+A Success

There is quite a bit written about the failure of mergers and acquisitions (M+A) activity, occasionally even competing with President Trump’s tweets. The reasons are as numerous as the transactions themselves, while the analyses tend to focus on sexy megadeals and the related personal intrigue of fractured family relationships (the sizzle that is apparently attractive in today’s deal world).

By comparison, a focus on what really drives value in lower middle market healthcare transactions is lacking. You don’t read about it in the statistics and you rarely hear a success story of how an organization built sustainable value over time, to the benefit of the owners, employees and customers. Fortunately, there are many success stories based on consistent strategies that healthcare entrepreneurs use to complete transactions.

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Exit Planning, Healthcare Sectors
6 Great Reasons Healthcare IT Entrepreneurs Should Go With A Financial Partner For The Whole Enchilada

Today, financial buyers, especially private equity groups (PEGs), are competing pedal-to-the-metal with strategic buyers for quality healthcare IT deals. Healthcare IT companies are at the forefront of these heated competitions, as they seek all-time-high valuations from financial and strategic pursuers alike. While strategic buyers look to capture immediate synergies with acquisition targets, PEGs often do not have that luxury for their platform investments. This disparity can leave a gap in valuations between the two types of buyers.

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Exit Planning, Market Trends, Valuation
7 Key Healthcare Value Drivers in 2018

Today’s turbulent healthcare industry offers many challenges for healthcare executives. Despite this, providers can create significant value that will help them to build their healthcare businesses, finance growth, and ultimately sell their companies for the best price. Seven key value drivers for healthcare owners in 2018 include the following

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Exit Planning
7 Ways Buyers Can Easily Blow Healthcare Transactions

Much of the literature on failed healthcare transactions focuses on seller-related problems – unrealistic expectations, poor margins, a troubled market, and even fraudulent financial reporting. But it takes two to tango and buyers have their role. Sometimes, they lack other-awareness in the following ways.

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Exit Planning
9 Great Reasons To Hire A Healthcare M+A Advisor

From time to time I am asked the following question: Why should I hire a specialized merger and acquisition advisor or investment banker for my healthcare company? A simple answer would be, because it's a win-win situation for all the parties involved. A more complete “why” can be found in the following reasons...

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Exit Planning
Is Private Equity Money Worth The Hassle?

Money is money, right? While that's undoubtedly true, investment money always comes with strings attached. Private equity groups, venture capital, and personal investors are all looking to achieve certain growth and revenue targets. For example, venture capital notoriously likes the capability to replace a company’s founder if revenue targets are not achieved. Founders looking for investment capital need to be aware of these kinds of stipulations inherent in each investment partner. If you are not careful, those unforeseen nuances can lead to long-term problems.

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