How do I know which surgery center buyers I should contact?

This goes back to the market – what you want and what market your surgery center fits into. If your center has an EBITDA of $600K and not really high level executive team, then there is zero reason to go to the ambulatory surgery center private equity groups market. Thus, you would look at the hospital health systems that are in your market area or have a desire to be in your market area. How would you know if they want to be in the market area? Call them; when in doubt pick up the phone and present the teaser. It is a lot of work, but at this stage of the process you MUST create competition. For example, we recently sold a center that had been in conversation with a hospital literally 5 miles from it for a few years. This hospital had not been very helpful in the development of the center by pressuring the docs to not refer there. The hospital made offers a few times and over time those offers were reduced and timelines not met, etc. The physician owner finally engaged us and we created competition for the center through solicitation offers from health systems not in the local market, but with hospitals in the region and we were able to negotiate an increase in sales price of 40% and much more favorable terms with the hospital 5 miles away because they did not want the competition putting a flag down in their back yard. This was a situation where we allowed the rumors to fly because it helped drive up the price and allow us to have very favorable terms. It all started with the teaser being emailed then a follow-up call presenting the teaser. ASC Management company names are fairly easy to locate. There are about 60 national and regional management companies. They all have websites that have information about them and their investment box, or investment criteria if you will. If your center scores high as far as the most attractive characteristics and has an EBITDA of a million or more, then the financial control interest surgery center buyers (investors that want to purchase 51% or more) would be in your universe. When in doubt send your teaser out to the CEOs or development...

How do you understand the art of sales prices – who has use it or lose it money, what management company is going public, who has a strategic need for a center in a certain area, etc?

Great question. A value is for a certain point in time and your center is worth as much as someone is willing to pay for it. If you are looking to maximize your value capture and the terms of the deal, you would conduct what Investment Bankers term the Broad Auction Approach. I typically stay away from the word auction with buyers because the word is what is it is and it sometimes elicits a negative connotation in their mind, but they are smart people and know what we are doing. You would prepare your center then go to market with it. Market it to every conceivable buyer and buyer type for centers like whatever center you are marketing. This process would help you learn the answers to your questions. While granted this process takes a little longer, you will get the answers to your...

How do you research the buyers and investors in those markets?

Researching the surgery center investor markets for most buyer universes is not complex. This process is one of the easy steps. For the hospital health systems look towards the hospitals in your immediate market and then the outlying markets for systems that might have an interest in putting a flag in the ground in your market. In each of the markets, when in doubt put them on the list of potentials. For the ASC management companies you can look at the ASC association directory, Becker’s Review list of management companies, attend ASC conferences as well as call the other ASCs in the state to see who their management companies are. Additionally Google is a great tool for locating the local and regional management companies. So is LinkedIn. For physicians you can look to the state provider databases, the hospital and other ASC provider directories and LinkedIn, we use LinkedIn a good bit to reach out to physicians, management companies, hospital executives and financial buyers. The toughest market for owners will be the financial markets. This market is very large and if you have no experience with this market the tough part is figuring out who would be open to buying ASCs. There are databases that are professionally prepared that have contact information and investment criteria that you can read. You can send out your teaser to the contacts listed. Additionally if you are thinking payers are within your universe, just look at the list of the insurance providers in the area. The regional providers are typically the most interested compared to the national payers but things are...