Healthcare Industry Acquisition Tips


The healthcare M&A frenzy shows no signs of slowing. Many owners are seeking to sell their companies or a product line as new regulations make turning a profit progressively more difficult. An entire industry is struggling to survive amid reimbursement cuts, which helps to explain the rise in strategic asset purchases. Where healthcare companies once attempted to be one-stop shops, there’s now a significant push to narrow product lines and sharpen their focus. Before beginning the acquisition process, an organization must strategically prepare to ensure success. Here’s how to do it.

Prepare the Company
A management team with excellent leadership skills can strengthen your financial standing and your operational processes. Keep this group involved and informed, so that they can assist with the transition and continue to oversee daily operations. As the ownership team negotiates the sale, overseeing daily operations must fall to a strong and reliable group of leaders.

During a sale, overall visibility of the company increases. Having a compelling brand story ready builds credibility and confidence, driving value and reducing the risk of lost customers and staff. Your corporate image plays a key role in whether third parties will want to move forward with you.

Set Clear Goals
Both buyers and sellers must develop clear criteria for a successful transaction. Determine your motives early, and stick to them. Whether you hope to expand your product line or deliver better services, you must have a keen understanding of how to reach these goals.

Be clear about your motivations and what you hope to gain from the transaction. Consider how the transaction would impact not just your career, but also the company’s brand and future. Whether your goal involves expanding the type of healthcare services or products offered, diversifying customers or simply exiting the market, it is critical to understand your objectives. This mutual understanding helps finalize the deal.

Protect Your Customers and Your Staff
Identify issues and concerns for staff and patients early. Particularly if you hope to sell the business as a whole, your team becomes part of the package. Your staff should serve as a valuable resource and a pipeline to current customers.

Allow corporate objectives to dictate expectations for your team. Then clearly communicate those expectations. High-quality service often depends on a knowledgeable team, so appropriately incentivize key staff to stay on board.

Stay Compliant
Nothing kills a deal like a major fine or government investigation. Ensure your legal team knows how to ensure you comply with Medicare regulations and other billing requirements. FMLA, ADA, EEOC, and other issues can also come into play. Don’t neglect these important drivers of financial and legal health.

About Edgemont Partners
Edgemont Capital Partners is a specialist healthcare investment banking firm providing the highest level of mergers and acquisitions advisory services to 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 150 transactions representing more than $60 billion in combined value.