Preparing founder-led healthcare businesses for exit
T. J. Wallace
by T. J. Wallace
It’s no question that M&A has been more challenging in recent years, however, deals are still getting done in this environment. The key characteristics separating successful deals from those that fail to close are often time in planning and preparation in anticipation of how these and other potential challenges may impact the business. Healthcare deals often take on further complexity in the number of third-party stakeholders involved and their alignment, or misalignment, of interests. For these reasons, it’s important for the owner and the M&A advisor to take a thorough assessment of the reason(s) for selling, the objectives, potential deal challenges, and the state of the business itself.
In any business sale it’s important for the owner to align with the M&A advisor on why a sale is being considered. Maximization of value, speed of execution, and certainty to close, are the most common factors around which a process is designed. However, other important factors such as cultural preservation, employee treatment, and leaving a “legacy” can be just as important to an owner. Understanding these motivations and to what degree each of these factors is important, will aid the advisor in designing a bespoke sale process.
Ensuring that the business is adequately ready for a potential sale from a financial, operational, and legal perspective is of paramount importance. To properly accomplish this, an honest and open assessment of the business between the owner and advisor must be performed. A good advisor knows what a buyer will expect in these matters. Understanding how the business operates today is important, but even more so is how it will be able to operate in the hands of a new owner. Making honest assessments of these items, and how to potentially address or mitigate ahead of launching a sale process, will allow the diligence process to run more smoothly. Legal review of contracts, disputes, or liabilities is typical confirmatory diligence in any process. However, in healthcare, legal and regulatory diligence is more critical than in most other industries.
In terms of the actual marketing and due diligence materials in a transaction, a process will only move as quickly as the documents are able to be provided to buyers. Any delays in providing these items, adds to the time it takes to educate the buyer and for the buyer to efficiently conduct their diligence. For this, getting as much of the marketing and diligence process items complete ahead of formally launching a process helps to avoid any surprises or interruptions later. To aid in this, it’s often helpful to have an individual or team identified at the business that can liaise with the advisor. This can lead to greater engagement and more effective negotiation with the buyer once in a process, helping to achieve the intended deal objectives.
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T. J. Wallace is a Managing Director at Hyde Park Capital, advising healthcare and industrial clients. He has 20 years of experience in corporate finance, including roles at Bank of America, Jefferies, and Deutsche Bank. He holds degrees from Bucknell and Cornell. Contact T. J.
GCG member firm Hyde Park Capital Advisors, LLCTampa, FL, USAT: +1 813 383 0202
Advisory, Corporate Finance
Hyde Park Capital is one of the nation’s most active investment banking firms, specialising in sell-side M&A for entrepreneurs and family-owned businesses. The firm delivers senior-level service, strong outcomes, and tailored solutions across a range of industries.
