Most owners want not only the best price for their ambulatory care center, but also a corporate partner that will grow their business and increase its profits. Whether they own an ambulatory surgery center (ASC), endoscopy center, radiation oncology center, or urgent care center, they want a partner with a history of success. When someone comes to us and says to sell my endoscopy center or sell my surgical center, there is no secret formula to ensure you get both the best outpatient surgery center multiple when you sell and an ideal partner. However, a well-designed and executed proactive campaign that solicits multiple offers from diverse types of ambulatory center buyers and then leverages the short list of competitive offers which best match your desires is the most effective way to get everything you want. We help you to sell your ambulatory care center.
In order to obtain the best price when you sell your center, it is imperative that multiple potential ambulatory care center buyers are introduced into the process and that the future potential of the business is conveyed along with the history of the organization. Since the sales process by which this information is communicated is extremely important, Ambulatory Alliances utilizes a process that will position you for the most profitable outcome when you sell your center.
Selling your ambulatory surgery, endoscopy, radiation oncology or urgent care center?
The best method is a two-step bid solicitation process, which typically includes the following steps:
- Set goals. The seller’s specific, personal goals set the framework for the entire undertaking. That’s why we help you understand and clarify your particular desires and objectives. These goals can differ widely among owners. For example, in some cases an ambulatory center owner may want an outright sale of the business, whereas in other cases, recapitalization or a strategic alliance with either a management company or hospital is more appropriate for achieving the desired outcome. In some instances an owner might wish to retire and leave the business immediately after the sale has been completed, while another owner may want to continue working in the center joint venture for some specified time. We understand the ramifications of different deal structures and will help you determine the correct path for realizing your desired end result.
- Create preliminary documents. The first documents delivered to prospective buyers are the Confidential Seller Profile and Confidentiality/Non-Disclosure Agreement (NDA). We help the seller prepare these in order to get the selling process started. A Confidential Seller Profile is crafted so that it anonymously describes your company, its achievements, its assets and its future growth potential. It focuses on identifying the significant attributes of your center that are likely to be valued by buyers and highlights these features to help a prospective buyer determine if they want to explore an acquisition.
- Develop Seller Memo. At this point in the process, we work with the ASC seller to commence gathering the information needed to develop the Seller Memo. This is the central marketing piece for your center and is a much longer overview. It is a profile of your history that highlights your company’s financials, operations, management and strategy with a marketing focus. It also discusses the effects of industry and economic forces, presenting a fiscal model—a spreadsheet-based rendering of historical and projected financials —paired with dynamic drivers to allow a prospective buyer to intrinsically understand your center’s movements. Your Seller Memo will go to great lengths to identify and describe the significant attributes of your ambulatory center that are likely to be valued by buyers. We will examine your health care business from all angles, applying our knowledge of the elements that outpatient center buyers seek, and craft a Seller Profile that highlights both the obvious and not so obvious positive distinctions of your business.
- Identify prospective buyers. Next, we conduct extensive research to gain a thorough understanding of your center and use a combination of our proprietary data warehouse and several public databases to identify buyers that would fulfill your needs. We prepare a target list of potential buyers with the understanding that identifying qualified prospective buyers is critical to achieving the maximum price and terms acceptable to you. Our list of prospective buyers may include management companies that own and manage ambulatory care centers like yours, local and/or regional health systems and hospitals, competitors, tunnel buyers (i.e. diagnostic groups that want to purchase a radiation oncology center) and private equity groups that invest in ambulatory centers. We understand the importance of concealing your identity from certain prospective buyers. For example, you may not want to contact certain competitors, or you may want to contact them late in the process, so we will work with you to determine which prospective buyers should be contacted and when.
- Initiate contact. At this stage, we make initial contact with potential buyers and deliver the Confidential Seller Profile to each identified prospective buyer. Remember, this document contains only a summary description of your ambulatory center and masks its identity. Our strategy is to reach as many prospective healthcare buyers as the marketing strategy requires, but maintain confidentiality. The key is to get as many potential targeted healthcare buyers interested as possible.
- Gauge interest. We contact each party within weeks after delivery of the Confidential Seller Profile to gauge their interest and talk about acquiring your ASC, endoscopy center, radiation oncology center, or urgent care center. After obtaining executed Confidentiality/Non-Disclosure Agreements that you approve, we will converse with potential buyers of your radiation oncology center and encourage them to complete a short qualifying questionnaire. Understanding the ever-present need for confidentiality, we screen each interested potential buyer before divulging any more information about your ambulatory center. Using our experience, we determine their true level of interest (i.e. are they tire kickers or just gathering competitive information?) and ability to close (i.e. do they have the funds or access to financing to buy the center?).
- Provide more information to qualified buyers. Since the Confidential Seller Profile contains limited information about your endoscopy center, an interested buyer will require further details to determine if they want to pursue an acquisition. This is where the Seller Memo and Virtual Data Room comes in. We will deliver the Seller Memo to the prospective buyers that continue to express an interest in your center, have executed an NDA, submitted the short buyer-qualifying questionnaire and have been deemed by you as qualified to purchase. After receipt of the Seller Memo, those healthcare buyers expressing continued interest may want to discuss your ASC, Radiation oncology or urgent care center in further detail and request additional documents. We will set up the Virtual Data Room for exchange of information and could set up conversations between the buyer and seller. After this, each prospective buyer should have sufficient information to determine if your ambulatory surgery center, radiation oncology center or urgent care center is a good purchase candidate. It is then time to determine which prospective buyers want to move forward.
- Detail sales process to prospective buyers. At this point, we will set expectations as to how the sales process will be handled and ensure that prospective buyers are provided with the details they need to make an offer for your outpatient center. We will contact each prospective buyer and request that they submit a non-binding Letter of Interest specifying a purchase price range and material terms of a purchase.
- Set due date for 1st round Letter of Interest. We will inform the prospective buyers of your center when a first-round Letter of Interest is due. Buyers will make offers based only on the information in the Seller Profile, any additional information that we file in the Virtual Data Room, and the corresponding conversations.
- Review 1st round Letters of Interest. Keeping your ultimate goals and objectives in mind, we will work with you in analyzing and comparing each Letter of Interest. Using our industry experience and prior conversations with the prospective buyers, we work with you to determine each buyer’s true level of interest and their ability to actually close the transaction. Those prospective buyers deemed unable or unlikely to purchase your company will be culled from the process.
- Select buyers for 2nd round. You will select three to five qualified buyers with which to proceed and invite into the second round. Prospective buyers still in the running at this stage need to perform due diligence.
- Provide greater information to selected buyers. Potential buyers might want to meet management and learn further strategic details about your center. You can invite the prospective buyers for a conversation and presentation where they will listen to you talk about your center, have some Q&A time, and go on site visits. The majority of this can be done virtually. Around this time, you will also include more information in the data room for prospective buyers. The data room, which can be handled electronically through our Virtual Data Room, is a database of lots of documents (financial, legal, marketing, etc.) that the buyers and their advisers need for due diligence. Our knowledge of your ambulatory center and the key value drivers that ambulatory surgery center, endoscopy center, radiation oncology center and urgent care buyers seek allows us to help consult with you on these presentations, tours and meetings for you so that you can present your ambulatory center in the best light.
- Receive 2nd round bids. After prospective buyers have acquainted themselves with your center’s operations, management and facilities, it is time for them to commit to moving forward. They are given a period of weeks or months for further due diligence and then second and final round bids will be due. This is a negotiated sales process and these bids will be binding. In addition to the proposed purchase price and outpatient center multiple, the buyers will have to answer other questions such as how they will finance the deal, what contingencies they may have, major reps and warranties, internal approval process, etc. Sometimes they will also be asked to mark up a purchase agreement that you (via the lawyers on your side) will send them. Although the selected buyer already knows quite a lot about your center, they will want to investigate further by conducting more buyer diligence and entering into a definitive agreement.
- Select the best offer. The highest offer price or highest outpatient center multiple is not necessarily the best offer. Many factors such as financing, payout terms, management agreement, growth strategies and post-closing terms must also be considered and compared. Subjective factors also come into play. What is the rapport between you and the buyer? What does the buyer intend to do with the ambulatory center post-acquisition? Does the buyer have the means to close the transaction? Will the management company walk away if negotiations do not go smoothly? Will the hospital buyer make unreasonable last minute demands? Will the buyer be difficult in negotiations? Selecting a buyer is both an art and a science. You will not be alone at this critical juncture in the process. Applying our experience in transaction structures and using the knowledge we have gained about each prospective buyer, we will help you compare offers that might appear to be apples and oranges. This in turn will enable you to choose the deal that best achieves your goals. So there you have it our guide to help you answer your question how to sell my endoscopy center?
Want to sell your ASC, endoscopy, radiation oncology or urgent care center?