Intrepid was proud to sponsor and participate in the second annual Autism Investor Summit, which brought together many of the country’s fastest-growing autism services businesses with leading private equity investors and national platforms. Due to the extraordinary valuations seen in the autism services industry over the past several years, many business owners in this sector are eager to explore transactions as evidenced by the conference’s attendance more than doubling from 2019’s event. A few major themes emerged during our conversations:
Resources to Scale – Given the fragmentation and valuations in the space, there is no shortage of providers seeking capital or a sale transaction. One major point of differentiation is if the target can truly be considered a platform investment with the resources to scale. Does the company have the management, IT systems, clinical protocols and back-office support necessary to grow a business? If so, these attributes can lead to a substantial valuation premium versus those providers lacking these resources.
Increasing Need for Technology – Several factors are driving providers to strategically adopt technology to keep pace with the market. Such factors include (i) growing patient demand and the importance to effectively manage the clinical documentation in a digital world, (ii) an increasing focus on how to digitally monitor treatment outcomes while ensuring compliance, (iii) continued challenges to recruit and retain quality staff which lead business owners to identify solutions that can lighten their team’s workload, and (iv) increasing needs for real-time KPIs that can allow business owners to enact process improvements while keeping up with client demand.
Reimbursement is Evolving – The rapidly growing market is forcing payors to thoughtfully consider their reimbursement levels and how to best select providers for contracting. In addition, the growing service demands are stressing the importance of highly skilled revenue cycle functions to ensure proper collections. Finally, innovative providers are exploring various treatment and reimbursement models to address value-based care initiatives.
Preparation is Critical – One of the most fascinating discussions during the conference came during a panel discussion which included our co-heads of healthcare Adam Abramowitz and Jonathan Bluth, during which the panelists commented on how much value can be created if a business owner answers several important questions before starting a sale process:
- What are the most distinguishing characteristics of your company that you think would drive the most value?
- Why do you want to sell now? Where would you like to focus your time post transaction?
- What would your company do with an investment that it can’t do independently?
- What are you looking for in an investor or buyer?
Even though autism sector valuations are very appealing and business owners could understandably be tempted to get out to the market as quickly as possible, clearly, there are still several business fundamentals that should be carefully considered pre-transaction in order to maximize value.
If a business owner takes the time to explore a transaction for the right reasons and properly prepare, the probability of success can improve drastically.