What marketing materials do you need to prepare in order to market your center and what information is contained in each?

Marketing materials often represent the first formal introduction of your ambulatory surgery center to the potential buyer/investor. They are essential for peeking the investors’ interest and creating a positive first impression. Effective marketing materials present the target’s investment highlights in a succinct manner while also providing back-up evidence and basic operational, financial and other essential business information. The two main documents for the early stage of the process are the teaser and the confidential seller memorandum.


The teaser is the first marketing document presented to prospective buyers. It is designed to inform buyers and generate sufficient interest for them to want to know more. The goal is to garner interest not to screen out. You will have a phone conversation with the potential buyers that have sufficient interest. That conversation will help determine if they are a serious buyer or not.

The teaser is generally a short one or two page synopsis of the surgery center, including the overview, highlights and summary financial information. You want to include the most important information that a buyer wants to know about first such as:

  • How many physicians are partners and how many perform cases at the center
  • The case mix
  • In-network or out of network and the percentage of each
  • The size of the center (sq ft and ORs, procedure rooms, etc.)
  • Case volume
  • Percentage of the overall cases are perform by each physician
  • Years in the business
  • Revenue and EBITDA
  • The year over year growth
  • In a CON state or not
  • Location (we would only put the general area of the country)
  • A few compelling lines about the future growth of the center and local market

Make sure that this is a positive presentation of the ASC. Do not put in screening statements or screening questions. I received an email a few years ago from a physician owner of an ASC-the email I assume was his version of a teaser. The tone of the email was combative with a lot of screening statements that did not leave a very positive first impression. I actually visited the center almost two years after I received that email. The center is amazing, it is very profitable at about 20% capacity, the capabilities are limitless, the rooms are huge, there are plenty of ORs and procedures rooms, the CON is very liberal for an ASC because it belonged to a hospital at one time but the center is stuck in neutral. The challenge is the disconnect in the process and not working to find common ground. The physician’s demands were presented as if in stone with no flexibility. Based off the response or lack thereof, the introduction was not successful and it tainted the water. So the takeaway is that the process is important as is first impressions.

Selling memorandum

The seller memorandum is a detailed written description of your surgery center that serves as the primary marketing document for the surgery center. It takes significant time and resources and the collaboration of many people to draft this document. It typically contains an executive summary, investment consideration and detailed information about your surgery center as well as market information, operations, facilities, management, employees and surgeons.

The memorandum contains a detailed financial section presenting historical and projected financial information with an accompanying narrative explaining both past and expected future performance. This process is carried out by the deal team and the CFO and/or finance team. This process involves normalizing the historical financials and future financials-you develop a set of projections, typically 5 years in length, as well as supporting assumptions and narrative. The projections must be realistic and defensible in the face of a potential buyer’s skepticism.  This basically tells the story of your surgery center and the deal. Your financial statements are recast for discretionary and onetime expenses. You include whatever information is necessary to enable a buyer to make an informed decision to move forward without giving too much sensitive data away. Include a benefits stream that may compromise earnings, cash flow and distributions on a pro forma basis.

Confidentiality agreement

A confidentiality agreement, also known as a Non Disclosure Agreement, is a legally binding contract between the surgery center and each prospective buyer that governs the sharing of confidential company information.

The confidentiality agreement designates the time period during which the confidentiality restrictions remain in effect.

It outlines under what limited circumstances the buyer is permitted to disclosure the confidential information provided and also prohibits disclosure that the two parties are in negotiations.

Mandates the return or destruction of all provided documents once the prospective buyer exist the process.

Prevents prospective buyers from soliciting to hire or hiring the surgery center employees for a designated time period.

Prevents prospective buyers from collaborating with each other or with outside financial sponsor without the prior consent of the target-this is to preserve the competitive environment.

Management presentation

The management presentation is typically structured as handouts in this market. Typically, if an investment banker is engaged he will take the lead on preparing these materials with substantial input from the surgery center. This is for when the potential buyers come on site to visit the surgery center and the leadership. There is significant rehearsal time that is intense and time consuming. The presentation format for the most part maps to the seller memorandum, but is more concise. It contains additional level of detail, analysis and insight into the growth potential of the surgery center (because this is what the buyers are buying-future growth).

Data Room

The data room serves as the hub for the buyer due diligence. It is a location typically nowadays online where comprehensive detailed information about the surgery center is stored, cataloged and made available to pre-screened buyers. It contains the stage one and stage two due diligences. You can create folders within you data room that allows you to release information in folder or in chunks if you will. You control the flow of information as far as who sees what and when they see it. A well-organized data room facilitates buyer due diligence, helps keep the transaction process on schedule and inspires confidence in buyers. The data room tracks the activities such as when someone views a document, downloads, etc. Additionally you can control the access, ability to download, upload, view, etc.

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Category: Selling My Ambulatory Surgical Center
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