Intrepid’s Healthcare Group recently co-chaired a healthcare M&A Webinar with accounting firm RSM which highlighted best practices in preparing a healthcare business for a transaction. Panelists discussed perspectives from both sides of the table: the Head of M&A for one of largest and most acquisitive physician services organizations in the country (Ernest Varvoutis from Team Health) and a C-suite executive for a laboratory services business in one of today’s most exciting new areas of consolidation (Robert Chilton from Ovation Fertility).
Key Takeaways from the Webinar
Get Your Financial House in Order
It is never too early to start preparing, either by developing a system for reporting monthly financial statements, assembling a data room, or obtaining a quality of earnings report, all of which are vital factors in streamlining a diligence process.
Prepare the “Right” Financials
Investors and acquirers want to see GAAP, accrual-based financials. Also, with so many complexities in the healthcare revenue cycle, it is important that you can articulate the impact of reimbursement rate changes and the predictability of any payer irregularities, such as recoupments.
Compliance Is Key
Ensure that experienced healthcare legal counsel has vetted your activities and legal structure. Inappropriate or aggressive tactics will likely be identified in diligence, normalized in a buyer’s review, and potentially blow up a deal.
Invest in Scalable Infrastructure
Regardless of a company’s quality or outcomes, much of the value in a healthcare business lies in the managed services organization that handles its billing, collections, compliance, contracting, HR and other key back-office functions. Healthcare service providers lacking in this area will find difficulty attracting a premium multiple.
It Takes a Village
Don’t try to go at it alone. Hire strong healthcare-focused accountants, legal advisors and M&A advisors to best position you for a successful outcome.
A recording of the Webinar and presentation slides are available for complementary download. For those that would like to learn more, please don’t hesitate to reach out.