Your Primer to Healthcare Mergers and Acquisitions

Is Your Healthcare Company Ready for Sale?

Jul 30, 2019

by David E. Coit, Jr.

by David Coit, DBA, CVA, CVGA, CM&AA, Director of Finance + Valuation

Volume 6 Issue 15, July 30, 2019

After years or decades building your healthcare company/practice, it's increasingly likely that you will find yourself thinking about the prospects of selling your company. Whether you have a formalized exit strategy or are taking a "seat-of-the-pants" approach when it comes to preparing for sale, you must be able to view your company from a buyer's perspective.

More specifically, you will want to understand the key "value drivers" of your company. These are the qualities prospective buyers are most interested in seeing and learning about. To gain a better understanding of how your company is performing — specifically concerning these value drivers — buyers will typically ask you the following questions:

  • Does your company have a history of consistent growth?
  • Is your company part of a growing sector?
  • Are you increasing your share of the market?
  • Have you created barriers to competition?
  • Are any of your customers/patients contractually committed?
  • Are any of your products or services unique and provide you with a competitive advantage?
  • Do you have a recognizable brand?
  • Is your company innovative?
  • Do you enjoy net margins greater than the industry average?
  • Do you have a diversified customer/patient base?
  • Do you have a diversified payer mix?
  • Are you using best practices for accounting and financial matters?
  • Is your company sustainable without you?
  • Are your products or services delivered in a systematic and process-driven manner?
  • Do you track key measures of customer/patient satisfaction?
  • Do you have a skilled leadership team that succeeds in meeting or exceeding your goals and objectives?
  • Does your company have the ability to attract, develop, and retain quality employees?
  • Are all of your company's legal matters in order?

If you find it difficult to confidently answer these questions, your company might not be ready to sell, or at least not sell at a price your desire. The good news is that, as George Sandmann of CoreValue notes, these holes in your operations are fixable.

The question you must answer is, "What am I doing to fix the holes in my operations?" If you intend to sell your company in the near or at least the not-so-distant future, don't delay. The healthcare M&A market is currently very active. Buyers are eagerly acquiring healthcare companies that create investor/buyer value. Company owners only have one opportunity to make a first impression to buyers. Will your first impression lead to a successful sale at the price you want for your company or will it leave you with long-term regrets? The work you put in today can significantly influence the reward you earn tomorrow.

David E. Coit, Jr.

David E. Coit, Jr. DBA, CVA, CVGA, CM&AA, CBEC

Director, Finance + Valuation/Partner

David is a seasoned commercial and corporate finance professional with over 30 years’ experience. As part of the VERTESS team, he provides clients with valuation, financial analysis, and consulting support. He has completed over 150 business valuations. Most of the valuation work he does at VERTESS is for healthcare companies such as behavioral healthcare, home healthcare, hospice care, substance use disorder treatment providers, physical therapy, physician practices, durable medical equipment companies, outpatient surgical centers, dental offices, and home sleep testing providers.

David holds certifications as a Certified Valuation Analyst (CVA), issued by the National Association of Certified Valuators and Analysts, Certified Value Growth Advisor (CVGA), issued by Corporate Value Metrics, Certified Merger & Acquisition Advisor (CM&AA), issued by the Alliance of Merger & Acquisition Advisors, and Certified Business Exit Consultant (CBEC), issued by Pinnacle Equity Solutions. Moreover, the topic of his doctoral dissertation was business valuation.

David earned a Doctorate in Business Administration from Walden University with a specialization in Corporate Finance (4.0 GPA), an MBA from Keller Graduate School of Management, and a BS in Economics from Northern Illinois University. He is a member of the Golden Key International Honor Society and Delta Mu Delta Honor Society.

Before joining Vertess, David spent approximately 20 years in commercial finance, having worked in senior-level management positions at two Fortune 500 companies. During his commercial finance career, he analyzed the financial condition of thousands of companies and had successfully sold over $2 billion in corporate debt to institutional buyers.

He is a former adjunct professor with 15 years' experience teaching corporate finance, securities analysis, business economics, and business planning to MBA candidates at two nationally recognized universities.

We can help you with more information on this and related topics. Contact us today!

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