What are the goals of the preparing to sell stage?

When you think about selling your ambulatory surgery center, you as the surgeon owners will have a few outcomes that you want see. Typically some of those outcomes are peak price and terms as well a corporate partner that will help grow your surgery center business, etc.

In order to put your surgical center business in the best position possible to reach those outcomes you must work hard in preparing your surgery center for sale. The goal of the prepare to sell stage is to prepare you surgery center so it looks as appealing as possible to potential buyers. Just as you would put a new coat of paint on your house before selling, you should make your company look as attractive as possible. This takes time, effort, money and foresight. Physician owners might find that their ASC runs better with all of these value enhancing factors in place, which makes their implementation a good idea for all parties involved. Surgery center buyers and ASC investors will find that preparatory work enables them to recognize the right acquisition fit when it comes across their desk. Making sure your surgery center is as appealing as possible requires us to look at it in a multidimensional manner.

Some of the goals are to:

  • Increase the speed of the process
  • Make the process more efficient
  • Manage and increase the overall perception of the buyers (which directly affects the value)
  • Learn as much about your business as you can

You want to properly position your business and articulate its investment merits. This process also allows for the identification of potential buyer concerns on issues ranging from growth sustainability, margin trends and case or procedural concentration, contingent liabilities and any physician partner issues.

You need to understand the assumptions that drive your surgery center’s financial model. This is very important as this forms the basis for the valuation that will be performed by the prospective buyers/investors. Therefore you must approach your surgery center’s financial projections from the buyer’s perspective and gain comfort with the numbers, trends and key assumptions driving them.

You need to understand the valuation methodologies that ASC buyers will use in their analysis (comparable companies, precedent transactions, multiples of trailing EBITDA, DCF analysis and sometimes LBO analysis-which is using debt)

The more questions that you answer upfront the fewer you must answer during the process to get the surgery center buyers familiar with your ambulatory surgery center’s story. The longer your surgery center business is on the market the easier it is to lose momentum. Time kills deals, speed matters, thus this process matters.

Efficiency.  The more information you provide the buyer the more quickly they can determine their interest level in the opportunity. No surgeon owner wants to waste time educating a potential buyer on their business only for the buyer to indicate they are not interested. So the sooner you can help some of the buyers to screen themselves out, the better. Use this process to help you decide which buyers to spend time with and ignore the rest.

Buyer perception. Surgery center buyers are influenced by appearances. The better prepared you are, the better organized you are and the better you understand and convey your unique message, the better your surgery center will look in the eyes of the potential investors. The more authentic and knowledgeable you come across the more believable your story will be and the more influence you will have on the buyers.

Surgeon owners too often want to speak about how much money the surgery center HAS made them and how great the ASC is but buyers only care about past performance to the extent it is a prediction of future growth.

If it’s already as good as it gets, then unless the buyer is looking for cash flow or the downstream benefits such as a hospital wanting the alliances, buyers may not see the value to them. One of your goals is to get to know your surgery center and local market so you can convey to the potential ASC buyers where the surgery center’s growth will be. You need to show the investors how far you’ve taken the surgery center and then how they can help you take it well beyond that.

Not doing all of this will increase the likelihood that the entire story and potential of the ASC will not be known to the buyers which in turn will equate to less interest and or less money for you when you sale your surgery center.

It cannot be stressed enough-buyers are looking for future value when purchasing or investing in your surgery center.

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Category: Selling My Ambulatory Surgical Center
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