Volume 9, Issue 13, June 22, 2022
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.
Generally, exit planning encourages healthcare business owners to do the following:
Let's first discuss the transferability of your healthcare business. To improve transferability for an exit, owners should take steps to ensure that:
In short, you need to be able to answer yes to the question confidently: Can the business run without you being there?
The value of a business is a function of risk versus reward in the eyes of buyers. As such, lowering perceived risks and increasing business cash flow increases the value of a business.
Let's look at a few key value drivers and questions owners should ask themselves in determining how buyers will view the value of their business.
Depending on your exit time horizon, you may be able to impact all the above listed value drivers positively. If so, you're on your way to maximizing your business's value while simultaneously reducing the riskiness of your business.
Exit planning and executing the plan can be a heavy lift, especially for owners fully engaged in the day-to-day operations of their businesses. Most small businesses will not be sold but rather be liquidated after the owner decides to retire should motivate owners to plan their exit better. I once heard an exit planning consultant exclaim that "exit planning is hard work because it's worth it."
Whether you're ready to exit your business now or plan to in the future, please consider containing one of the other Vertess Healthcare Advisors or me to discuss an exit plan.
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.