How do you choose what surgery center buyers and investors to contact?

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

If you center has an EBITDA of $600K and not really high level executive team, then there is zero reason to go to the financial markets. Thus you would look at the hospital health systems that are in your market area or want 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, one center 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. A few times they made offers 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. 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 backyard. 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 companies 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.

Recalling what we said about defining the market for you surgery center or your buyer universe if you center scores high as far as the most attractive characteristics and have an EBITDA of a million or more then the majority buyer would be in your universe. When in doubt send your teaser out, typically to the CEOs or development executives. Also have your surgery center development companies agreement drawn up and looked at.

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