How should an ASC put together a team of advisors for the sale, and who should be on that team?

Physician owners of ambulatory centers are very intelligent and accomplished professionals, but in general will likely only complete one or two sales transactions in the course of a lifetime. Yet those deals will probably be the largest and most significant financial sales transactions of their career. So by definition, the inexperience of these essentially novice surgery center sellers can prove financially catastrophic as they negotiate with a surgery center buyers’ full-time, professional M&A team. Additionally there are many implications that you will encounter, such as legal and tax, not to mention the negotiation strategies and business implications. Having the right advisors upfront can help you structure the transaction whereas to mitigate or lessen them

You should have a team that consists of the following:

  • Transaction Accountant
  • Business accountant
  • Transaction lawyer
  • Industry specific Investment Banker
  • Key member(s) of your management team
  • (If you are a larger group of surgeon owners then a transaction committee that is empowered by the group of owners)

Let’s speak briefly about the why behind the group and their roles. You should engage your accountant and a transaction accountant. They might be the same person, but oftentimes not. It is important that you seek out an accountant with significant experience with business transfers. I do not believe that they need to have specific ASC transaction experience. You need one who understands the different methods that you can use to transfer the business and the tax consequences of each. Your current accountant might know some, but do they know enough to make strategic recommendations? Do they understand the tax consequences around the allocation of the sales price? While we as investment bankers understand the tax implications and deal structure because of our experiences and finance education, we will point you and your accountant in some directions; we do not offer tax advice.

While it is very possible that you have healthcare lawyers that you call on often, you need to make sure that you have an attorney on your team that is very experienced with surgery center business transfers and the associated deal documents, and more importantly has the temperament to make sure the deal does not stall because they want to argue and debate issues that are not very important or worse allow their ego to get in the way.

Some articles attempt to tell physicians owners that they do not need a broker to help them sell their surgery center because the buyers are readily available. The authors of that must have only had experience with or exposure to some business brokers that only fax out a one pager on your center and then get out of the way. These are not the ones that you want or need, but industry specific investment bankers earn their fees multiple times over in multiple ways. We work with our physician owners from understanding the value drivers to making adjustments to their center’s business, capturing internal cases and re-syndications, defining the market for the center, identifying the buyers within each market, crafting the message that puts your center and its growth in the best light, marketing the center, and negotiating price and all the deal terms. Even if it’s not us, you need someone carrying your flag and negotiating your deal.  Most of the time this is very personal for the sellers and less so for the buyers’ experienced full-time deal team thus sellers sometimes need an advocate for the deal that represents the best benefit for them. You need to look at the investment banker’s strategic thinking, negotiations abilities and experiences in the surgery center space.

You will need someone from your senior operations team to be the point person within your center. This person will be the one that collects and provides the due diligence request. If you have a large group of physicians owners it is imperative that you get their buy-in, but it is too time consuming to get permission from each partner every step of the process. Thus we always recommend that you set up a small sales transaction committee. Obviously if you have a small group that would in essence be the transaction committee.

If you are doing some complex adjustments such as a syndication prior to the sale of a center, depending on the buyer and how the negotiations go you could need a third-party valuation in order to justify the price that is negotiated. While we as investment bankers can do some of this, know that our job is to maximize the sales price and are seen in that role, while an independent third party valuation professional is not typically seen in that manner. We can make referrals to the outside professional if needed.

Please log in to rate this.
0 people found this helpful.

Category: Selling My Ambulatory Surgical Center
Tags: ,

← How should an ASC put together a team of advisors for the sale, and who should be on that team?