Your Primer to Healthcare Mergers and Acquisitions

Selling Your I/DD Business: Why The Right Time Is Now

Jul 16, 2019

by Dave Turgeon

by Dave Turgeon, Managing Director

Volume 6 Issue 14, July 16, 2019

For many entrepreneurs, moving on from their business — especially if it's a business they founded — is one of the most difficult decisions to make. For owners of provider agencies that support individuals affected by an intellectual and/or developmental disability (I/DD), the decision can prove even more difficult when the owner has a personal attachment to and passion for the space.

The reality is that if a business is successful long enough, this is a process an owner must go through. It's either sell the business, transition it, or fold it. Not all owners have the ability to transition their business, and most would prefer to avoid shutting down operations That leaves selling as the most viable option.

I greatly enjoy talking with owners and learning their stories. Many created companies that have provided a wonderful service to their community for decades. They have made personal sacrifices involving time and money. As the father of a child with I/DD, I deeply appreciate their efforts and commitment. I'd like to see them rewarded when they sell their company. Selling the business is not selling out, nor does it represent a betrayal to their mission. It is a natural step in the evolution of the business and industry. Through a carefully executed transaction, they can feel good about securing money for their retirement and finding an owner that will continue to care for their clients with the same values and standards with which clients are accustomed.

While many owners find it difficult to start the process of selling their business, the reality is that it's a necessary and important step. As the old adage says, "Failing to plan is planning to fail."

The Market Is Hot … at the Moment

There is roughly $70 billion in annual revenue brought in by about 30,000 I/DD agencies. Of these 30,000 agencies, roughly two-thirds are for-profit companies and one-third are not-for-profit. The average period of business ownership is 20 years. What that means is that hundreds of companies seek a transaction every year.

Capital has been rapidly flowing into the behavioral health field, with private equity raising record amounts of money and currently sitting on more than $1 trillion of cash. It's likely they'll continue to acquire small- and mid-sized I/DD companies aggressively for the next few years. Beyond that, there is risk and uncertainty. Many people are expecting significant changes in the way services will be funded. There is also the belief that we're experiencing a "private equity bubble" that will eventually burst. When that occurs, buying will dry up and values will drop significantly. We've seen that happen, and even deals in process are put on hold.

When the 2007-2008 financial crash occurred, many baby boomers were hurt by having too much invested in the stock market. Their losses were significant, with some older baby boomers lacking the years remaining in their careers to fund a comfortable retirement. Today, many younger baby boomers still own businesses, with that ownership representing a significant part of their overall wealth. While it's impossible to know the perfect time to sell your business, we know from experience that we are in a very strong period for sellers and there is risk in holding on too long. I hope you'll take the time to carefully consider what's best for you, your business, and those most important to you.

Controlling Your Fate

While I believe it's only fair for owners who have worked hard and sacrificed to receive a good price for their business, I also understand that the sales price is not necessarily a seller's top priority. My colleague Rachel Boynton recently wrote about the importance of finding buyers that "… we relate to, respect, and trust to take the vision we had years ago when we started our business to the next level."

When you are ready to sell, we'd encourage you to work with an advisor who knows the I/DD industry and has completed many successful transactions. We offer free consultation and valuation services that allow us to learn the goals that matter most to you and help you achieve them.

Dave Turgeon

Dave Turgeon CM&AA

Managing Director

Dave's professional work history includes:

  • Vice President of Mergers & Acquisitions at Civitas Solutions and oversaw the completion of over 80 acquisitions and 10 divestitures. Civitas went public in 2014.
  • Managed the Mergers & Acquisitions Department at ReMed Recover Care, LLC. The company sold to Baird Capital in 2018.
  • Vice President of Mergers & Acquisitions at United Site Services (USS) during its period of explosive growth. The company sold to DLJ Merchant Banking in 2007.
  • Founder and CEO of MembersFirst during the “internet phase” of the late 1990’s and early 2000’s.
  • Senior Vice President at Browning-Ferris Industries. Responsibilities included Finance, Operations and Acquisitions. The company acquired hundreds of companies and grew revenues to over $12B.

He first became involved in the Behavioral Health space because of the disability of a family member.  The mission of these companies is both noble and personal to Dave. He helps business owners with the sale of their business, which means getting them the best value and terms. For him, it means thanking them for making the lives of others better.

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

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