How do you manage the process?

So how do you manage the process? No surgery center buyer offers to pay a higher price without being incentivized, even if it can afford to. It is the seller’s responsibility to employ a transfer process that leverages its strengths so that an ASC buyer will pay the maximum price and fair terms. Having said that, you want to release information as close to your timeline as possible in order to manage the process and your timeline and CREATE THE COMPETITION that will allow you to obtain the peak price and terms. We want the buyers to be in the same stage of the process as the others so we can leverage them against each other and be more confident in our negotiating position.

We typically, if the surgery center warrants this, go to the private equity group markets and to ASC Management Companies, then to hospitals. The reason is that in our experience that is the order of the highest priced offers and we want to have offers in hand if at all possible before hospitals health systems go to obtain a FMV.

We set the tone and outline what we want to see in a LOI during discussions with the ASC investor/buyers. We do not allow no-shop clauses unless they are accompanied with break-up fees. In other words, we will continue to market the surgery center and negotiate with potential buyers unless you put up money that if you do fail to close you lose it. Most of the buyers will attempt to have the no shop clause in the LOI but back off of it when we convey the break-up fee or they will pay the breakup fee. We have gotten break up fees into LOIs with all types of buyers.

You might even receive what a buyer will convey as a preemptive offer, which is an offer that has the intent and it is an attempt to lock out the other bidders with a high purchase offer.  Simply put they want to prevent you from marketing the surgery center, locking the center up with their offer while they conduct their due diligence. In these cases you need to look for the loopholes in their LOI and point those out, but most are not really preemptive offers, they just want you be buy into that and agree to the no shop clause.

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Category: Selling My Ambulatory Surgical Center
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