How do I know which surgery center buyers I should contact?

This goes back to the market – what you want and what market your surgery center fits into.

If your center has an EBITDA of $600K and not really high level executive team, then there is zero reason to go to the ambulatory surgery center private equity groups market. Thus, you would look at the hospital health systems that are in your market area or have a desire to be in your market area. How would you know if they want to be in the market area? Call them; when in doubt pick up the phone and present the teaser. It is a lot of work, but at this stage of the process you MUST create competition. For example, we recently sold a center that had been in conversation with a hospital literally 5 miles from it for a few years. This hospital had not been very helpful in the development of the center by pressuring the docs to not refer there. The hospital made offers a few times and over time those offers were reduced and timelines not met, etc. The physician owner finally engaged us and we created competition for the center through solicitation offers from health systems not in the local market, but with hospitals in the region and we were able to negotiate an increase in sales price of 40% and much more favorable terms with the hospital 5 miles away because they did not want the competition putting a flag down in their back yard. This was a situation where we allowed the rumors to fly because it helped drive up the price and allow us to have very favorable terms. It all started with the teaser being emailed then a follow-up call presenting the teaser.

ASC Management company names are fairly easy to locate. There are about 60 national and regional management companies. They all have websites that have information about them and their investment box, or investment criteria if you will.

If your center scores high as far as the most attractive characteristics and has an EBITDA of a million or more, then the financial control interest surgery center buyers (investors that want to purchase 51% or more) would be in your universe. When in doubt send your teaser out to the CEOs or development executives.

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