FAQ

At a minimum, you must hire a competent attorney and accountant to advise you during the sale process. But, there’s a decision to be made around a general deal advisor, also known as a broker, intermediary, or investment banker. They’re all labels for the same general thing: it’s someone who spans the sale process, providing services that help you complete a transaction.

While there are broad categories, no two intermediaries are the same. Some run very strict processes akin to an open auction, while others are highly selective to whom they shop a deal. Some provide years of consulting to prepare a business for a sale, while others are only briefly involved. Some prepare all your materials, function as your deal’s back office staff, negotiate your transaction, and lead due diligence. Others merely charge a fee to make the market, bringing together buyers and sellers.

Assess what you need and who can provide it. Ultimately, someone has to do the work. There’s going to be a seemingly endless amount of data to produce and decisions to make, both of which depend on expertise. It’s naive to think that an otherwise busy leader and their staff could somehow wedge in an extra 20 to 40 hours/week of work, often for months at a time. That’s not a sales pitch for hiring an intermediary, it’s reality.

• Who will source potential buyers, vet them, sort them based on viability, field requests, and arrange for phone calls and site visits?
• Who is going to gather and organize the complete history of my firm? This includes detailed financials stretching back at least a decade, customer contracts, vendor contracts, employment agreements, legal actions (threatened or pressed), and real estate agreements.
• Who will negotiate the deal, including the business decisions for the letter of intent, the subsequent due diligence, and final paperwork? There are roughly five hundred decisions that will need to be made/negotiated during the process.
• Who is going to keep me emotionally in check during the grueling process?
• Who will be focused on the transaction and proactively pushing the deal forward on my side of the table? What happens if that person fails?
• Who will I call when I’m not sure who to call? (Other than Ghostbusters…)

If you feel comfortable with your ability to navigate these questions, an intermediary may not be necessary. But as a word of caution, if you’ve never participated in, nor completed, a transaction of this nature, you’re likely lacking a helpful knowledge base. As Mark Twain wrote: “A man who carries a cat by the tail learns something he can learn in no other way.”

The worst path is to hire an intermediary who isn’t capable of serving your needs, gums up the process, and costs a ton. You need to select an intermediary who has the firepower to get the job done, will select for the right buyer, and will gel with your resources. They should fit you and not the other way around.

Great intermediaries have a thorough understanding of each company they represent. They’ve spent time building trust and understanding. They present opportunities honestly. They’ve prepared their client to understand the challenges of selling and tempered their expectations. Most importantly, they have committed to working to find the right buyer — not the easiest one or the one that earns them the quickest and biggest commission check.

Like hiring a great employee, hiring the right intermediary should take time. Evaluate multiple candidates. Ask for references. Walk through their approach and process. Discuss their experience in your industry, geographic region, company size, and preferred target buyer type. Evaluate whether you will be comfortable working through an arduous process with them. Dine together. Ultimately, go with the group you believe has the best incentives and will get you to the best outcome.

In general, we think any healthcare business owner would be smart to use an advisor to sell his or her company. It can be a very complicated and lengthy process, and getting the deal closed usually depends on navigating the process effectively. Also, any business owner would want to realize the most value for the company that he or she worked so hard to build, and an advisor who is dedicated to the sale will help to do this.

Healthcare business owners are often approached by potential buyers, even if they do not yet intend to sell. So, some owners think that finding a good and able buyer is easy and an advisor is not needed. These are the owners who learn the hard way that simply finding interested buyers is just the beginning of a long process. Lastly, healthcare business owners still need to run their businesses while the sale is proceeding, and an advisor does much of the required work which allows the owners to continue focusing on their business.

An advisor who is a generalist would probably provide a similar set of services but would not have the experience in healthcare service sectors to help its clients the way G R Capital Management could. For example, many of these businesses generate substantial revenues from third party payers, which includes Federal and state governments. G R Capital Management undoubtedly understands these payer systems better than a general business broker or banker, and this ability makes our acquisitions proceed much more effectively. The same can be said for how healthcare companies do their marketing, provide care, manage their clinical providers and administrative staff members, and handle legal challenges. G R Capital Management understands all of these business dynamics, because it is all we do. We subscribe to industry publications, attend conferences, and have daily discussions with industry leaders to keep up to date.

G R Capital Management advises clients in the revenue cycle management, medical billing, home health, hospice, physician practice, laboratory, medical device, and many more sectors of healthcare. There is much overlap in these sectors, and understanding each individual sector helps to understand the others. Few healthcare mergers and acquisitions advisors offer such a breadth of expertise.

Working with sellers involves interesting and varied relationships. Most sellers are confident which has helped them create a successful company. Setting a process timeline and establishing proper expectation helps eliminate any questions our clients have. There are always hurdles during the acquisition process. Lowering said hurtles to a reasonable height is our job.

We do not list asking prices. This is sometimes hard for our clients, and some buyers, to understand. We feel that there are just too many variables in any transaction, and each company is a too complex of an organization to reduce the operations to a simple number. It is not like selling a house (and even the listing price of a house is negotiable). A company is made up of people, processes, ideas, goodwill, and so on, and each buyer will appreciate and value these features differently. So, we ask buyers to bring their own offers to a seller, and the seller can negotiate from there. Of course, we help sellers determine what they should expect, but in the end, a healthcare company in a transaction is worth what the market will pay.

The first piece of advice that comes to mind is to make sure the reasons for selling are considered thoroughly. At first, an owner may be enticed by the future proceeds of a sale but may not really be prepared for the arduous process of selling the company. Also, some owners don’t consider what they will do after the sale, when they no longer have a company to which they can dedicate their time and passion. Buyers always ask why an owner wants to sell, and if the reason is not compelling, buyers often lose interest.
Owners must also maintain excellent financial and operating records prior to selling. The process of due diligence, conducted by the buyer after an offer is accepted, is tedious and time consuming, and excellent records make this process much easier for both the seller and the buyer. For healthcare business and agency owners, this includes more than just having clear income statements and balance sheets. In addition, owners must provide accurate accounts receivable aging reports, depreciation reports, patient census summaries, length of stay summaries, and so on.
One additional piece of advice we offer all sellers is to maintain confidentiality. As soon as rumors of a sale begin so spread among employees, patients, and referral sources, the performance of the business can suffer. This obviously makes a sale much more difficult. So, owners should try to maintain strict secrecy until the deal is closed.

G R Capital Management has evolved since it was founded in 2006. Since its creation, G R Capital Management has been closing larger and more complex transactions and has broadened its scope to include clinical and pathology laboratories, physician practices, and medical device companies. The team at G R Capital Management has also been growing, with the addition of other advisors and the creation of an excellent support staff.

We listen to our clients and have an honest and straight forward process that provides superior results.

We have two general ways of finding buyers. First, we directly contact potential buyers by approaching industry players with whom we have close relationships, and regularly distributing newsletters and lists of opportunities to our database of over 4,000 email recipients. We also have a proprietary database of almost 600 private equity firms who focus on healthcare investments and subscribe to a leading consultant that follows almost 2,400 additional private equity firms. We use these resources to create buyer lists for each transaction.
The second approach involves posting available opportunities to our own website, and to several other websites that serve as markets for companies available for acquisition. These sites are reviewed regularly by potential buyers, who contact us if interested.