EDGEMONT CAPITAL BLOG
6 Tips to Prepare for Healthcare Acquisitions
Owners of healthcare practices and organizations are continuously looking to sell either their entire businesses or individual components of their companies. The increase in strategic asset purchases is supported by companies hoping to survive in a world of insurance payment cuts. A few simple strategies can help businesses prepare for the M&A process.
Internally Prepare Your Business
You need a comprehensive management team to strengthen your operational and financial processes. Keep this key group informed so they can support you to reach business goals, while identifying potential targets. The management team should also be able to execute daily tasks without much oversight from the owner both before and during the M&A process.
You should also strengthen your PR and marketing teams to develop a company story. The overall visibility of your company can increase the number and improve the quality of inquiries. Your corporate image may help convince other parties to seek deals with you.
Run—and Know—the Numbers
Your financial statement must be well-structured and balanced, including a reliable summary of your net worth and liabilities. This allows you to showcase your profitability and shape the narrative about any shortcomings.
You should prepare for transition by making sure there are no liens attached to any of the assets you intend to sell. A lien search can help with this.
Get Clear About Your Intentions, and Your Plan
Why are you selling? What are your criteria for a good buyer? You must clearly define your objectives, as well as your ideal outcomes for selling your company. This helps you devise a plan that works, and prevents misunderstandings on both sides of the negotiation table. Mutual understanding fosters trust that can ultimately help finalize the deal.
Don’t Forget About Your Staff and Patients
Your patients make you who you are. Your employees help you deliver these services your patients depend on. You must identify and promptly address concerns that your staff and patients may have. When a larger medical company purchases another, the existing staff can be a valuable resource for sustaining customer relationships. You should be clear about what you need from your employees and what your team can expect from you. A clear integration plan can help make for a smooth transition and prevent misunderstandings that lead to staff confusion or loss.
Health companies are heavily regulated. Ignoring regulatory issues can mean losing Medicare funding and insurance coverage. You must comply with ADA, FMLA, and EEOC regulations, as well as healthcare specific regulations, and the terms of any agreements with insurers. Seek the sage advice of a healthcare lawyer for help following all the relevant rules.
Mergers are distracting and can take you away from your daily operations. This can cause your business to lose value. Instead, rely on a management team you trust, and lean heavily on a development team to help guide and facilitate the M&A process. Inadequate attention to either the sale or your business can be catastrophic. Deals that lose momentum lose value, and companies that see failed deals are less likely to make it across the finish line with a subsequent deal. A strategic transition plan that aligns with your mission and values can be a key source of momentum, and a guiding document for teams running the company and the merger.
About Edgemont Capital Partners
Edgemont Capital Partners is a specialist healthcare investment banking firm providing the highest level of mergers and acquisitions advisory services founder-owned and entrepreneur-run healthcare and life sciences companies in the lower middle and middle markets. Our world class transaction expertise is a result of our extensive and proven track record of success. We have advised on over 130 transactions representing more than $65 billion in combined value.