UNITED MEDCARE CAPITAL

By

October

Interesting Image
The Home Health Advisor
 
“Dedicated to Delivering Education for Building Value, Exit Planning and Mergers and Acquisitions”
Building Agency Value

One of the most critical elements for growth of an agency is establishing daily benchmark data of six critical factors that must be monitored daily.   These include:

  • Current cash in bank accounts
  • Current A/R balance including balance over 90 Days
  • Current A/P balance
  • Previous days billable
  • Previous days bank deposit
  • Previous days checks/payments made


For most owners in home health, getting a copy of your financials typically only tells you what HAS happened versus what IS happening. This report will provide the most recent data that you need to be focusing on…cash flow management.
 
We have tapped into some of the most successful agency owners with whom we have worked with and developed a great tool we call THE FLASH REPORT.  You can start using it today to track and monitor the six critical elements to achieve successful growth, increased value and managed cash flow.
 
As you complete the report daily,  you begin to compile data you can utilize to benchmark and build comparison data.   This information will allow you to monitor and take action to correct the most critical elements to your agencies success.
 
Click the file below to download THE FLASH REPORT template.  All formulas are set up… all you have to do is enter your numbers and the report will calculate your inputs.  It even includes calculations of three critical questions you need the answers to on a daily basis.

 
We guarantee it will be to your benefit…and best of all there is zero cost.  Just our way of assisting you to insure your success and increase the value of United MedCare Capital.
 
Feel free to modify as you see fit.  
 

Want to find out the current value of you agency and determine if there is a market to sell?  Click Here and we will provide a report illustrating the current value of your agency and let you know if your agency meets any of the acquisition criteria of the buyer groups  work with at United MedCare Capital.
Exit Planning Strategies

Having an exit plan in place is critical for every business owner.  At United, we work with business owners just like you every day.  Some are prepared and have written plans in place, but the majority have nothing in place and we have seen first hand how detrimental this can be to the ongoing success of a business following an unplanned exit.  Even if your plan is to pass it down to children or other family members, you must have a written plan in place.
 
The fact is, most business owners exit their business due to health reasons, burn out, divorce/partnership disputes and death.  Retirement is seldom the primary reason for an exit.   The primary reasons for an exit are often sudden, life changing events.
 
When one of these events occur, and there is not a plan in place, the business typically suffers and the value can be greatly diminished in a short period of time.  A written exit plan is a necessity for every business owner.
 
At United, we care about our customers and can provide guidance to help you develop an exit plan.  We even offer an ongoing service to help get you started.  It is by far the best value in the industry and offers ongoing annual updates at no charge…it really is an incredible value.

To learn more about this valuable service click here and provide the requested information.

Latest Merger and Acquisition Trends
 If you would like for us to contact you to discuss the latest trends and learn more about the sales process, please CLICK HERE and provide the requested information.
The Home Health M&A Market continues to witness an increase of owners selling their agencies.  From September to October we had a 14% increase and there is plenty of buyer demand with interest in multiple areas and service types.  With all the opportunities available, buyers are certainly cherry picking the best agencies to pursue.
 
With just over 150 transactions closing this year the trend is for continued consolidation in all areas of Home Health including skilled services, non-medical and hospice
 
Primary reasons for the continued consolidation are due to the roll out of bundled payments and stagnating reimbursement rates for state community services waiver programs.  New buyer types are entering the market daily to build census volume to support lower forecasted margins as well as new complimentary business lines.  Many small to mid-sized agencies exploring opportunities to exit now while margins are still decent enough to be attractive for acquisition
If you have been considering an exit and your revenues are in excess of $2 million now would be a good time to consider moving forward or at least explore your options.  CLICK HERE and provide the requested information and we will be in touch to set up a time to discuss how we can help.
We work with dozens of well qualified  buyers who will act quickly to transactions we represent.
The tables below illustrate current demand by Agency type and geographic area:
                        Key
 HIGH 5 or more buyer groups
 MEDIUM  3 to 4 buyer groups
 LOW  1 to 2 buyer groups
Home Health Agencies
State  Demand  State  Demand  State  Demand  State  Demand  State  Demand
AL  HIGH  HI  LOW  MA   HIGH  NM  MEDIUM  SD  LOW
AK  LOW  ID  MEDIUM  MI  MEDIUM  NY  HIGH  TN  HIGH
AZ  HIGH  IL  MEDIUM  MN  MEDIUM  NC  HIGH  TX  HIGH
AR  MEDIUM  IN  MEDIUM  MS  HIGH  ND  LOW  UT  MEDIUM
CA  HIGH  IA  MEDIUM  MO  MEDIUM  OH  MEDIUM  VT  MEDIUM
CO  MEDIUM  KS  MEDIUM  MT  LOW  OK  HIGH  VA  HIGH
CT  HIGH  KY  HIGH  NE  MEDIUM  OR  MEDIUM  WA  MEDIUM
DE  HIGH  LA  MEDIUM  NV MEDIUM  PA  HIGH  WV  HIGH
FL  HIGH  ME  MEDIUM  NH  MEDIUM  RI  MEDIUM WI  MEDIUM
GA HIGH  MD HIGH  NJ HIGH SC HIGH WY LOW
Home Care/Private Duty
State  Demand  State  Demand  State  Demand  State  Demand  State  Demand
AL  HIGH  HI  LOW  MA  MEDIUM  NM  MEDIUM  SD  LOW
AK  LOW  ID  MEDIUM  MI  MEDIUM  NY  HIGH  TN  HIGH
AZ  HIGH  IL  HIGH  MN  MEDIUM  NC  HIGH  TX   HIGH
AR  MEDIUM  IN  MEDIUM  MS  HIGH  ND  LOW  UT  MEDIUM
CA  HIGH  IA  MEDIUM  MO  MEDIUM  OH  HIGH  VT  MEDIUM
CO  HIGH  KS  MEDIUM  MT  LOW  OK   HIGH  VA  HIGH
CT  MEDIUM  KY  HIGH  NE  MEDIUM  OR  MEDIUM  WA  MEDIUM
DE  MEDIUM  LA MEDIUM  NV  HIGH  PA  HIGH  WV  MEDIUM
FL  HIGH  ME  MEDIUM  NH  MEDIUM  RI  MEDIUM WI  MEDIUM
GA HIGH  MD HIGH  NJ HIGH SC HIGH WY LOW
Hospice
State  Demand  State  Demand  State  Demand  State  Demand  State  Demand
AL  HIGH  HI  LOW  MA  HIGH  NM  MEDIUM  SD  LOW
AK LOW  ID  HIGH  MI  MEDIUM  NY  MEDIUM  TN  HIGH
AZ  HIGH  IL  HIGH  MN  MEDIUM  NC  HIGH  TX  HIGH
AR  MEDIUM  IN  MEDIUM  MS  HIGH  ND  LOW  UT  MEDIUM
CA  HIGH  IA  MEDIUM  MO  MEDIUM  OH  MEDIUM  VT  MEDIUM
CO  MEDIUM  KS  MEDIUM  MT  LOW  OK  MEDIUM  VA  HIGH
CT  HIGH  KY  HIGH  NE  MEDIUM  OR  HIGH  WA  HIGH
DE  HIGH  LA  MEDIUM  NV  MEDIUM  PA  HIGH  WV  HIGH
FL  HIGH  ME  HIGH  NH  HIGH  RI  HIGH WI  MEDIUM
GA HIGH  MD HIGH  NJ MEDIUM  SC MEDIUM WY LOW
If you would like for us to contact you to discuss the latest trends and learn more about the sales process please click here and provide the requested information.
Here is a snap shot of all the current home health related businesses listed for sale by price and by region.
Price  # For Sale  Percentage
Undisclosed 66 20%
Under 1 Million 212 63%
1 Million to 2.5 Million  39  12%
2.5 Million to 5 Million  13  4%
5 Million to 7.5 Million  2  1%
7.5 Million to 10 Million 1  .5%
10 Million to 15 Million  1  .5%
15 million and up  0  0%
Total 334 100%
 Region  # for Sale  Percentage
 Undisclosed  27  8%
 Mid-Atlantic  11  3%
 Mid-South  26  8%
 Mid-West  50  15%
 Mountain  8  2%
 New England  5  1%
 Pacific  64  19%
 Plains  11  3%
 South East  48  14%
 South West  84 25%
Total 334 100%
If you would like for us to contact you to discuss the latest trends and learn more about the sales process please click here and provide the requested information and we will be in touch to set up a time to discuss how we can help.

By

August

Interesting Image
The Home Health Advisor
 
“Dedicated to Delivering Education and Services for Building Value, Exit Planning and Mergers and Acquisitions”
Building Agency Value

2 Sure Fire Solutions to Increase Value

Review your general expenses:

Having a handle on your general expenses is critical to the overall success of your business.  For the majority of agencies operating in home healthcare, general expenses are one of the biggest factors to declining profit margins and overall value.

Just think about it for a moment.  Unless you are a private pay agency, the majority of your payers  (Medicare, Medicaid,  third party insurers, VA) all set their own reimbursement models and as a provider there is little you can do to raise your pricing.  You either grow your census and survive on volume or implement cost cutting strategies to reduce overhead and retain margins in years when rates are cut or stagnant.

Since the majority of your vendors (Landlord, payroll, insurance, etc) can and will increase their prices you have to develop relationships with multiple vendors to create market demand for your business which will provide a platform to lower your cost.

Solution: Find out your 10 largest vendors and establish a price list for the products and services they provide.  Then go to their competitors and request a proposal for the same services and products…and yes it is OK to let the competitors know your current pricing models.  In most cases the competitors will come up with lower pricing…this gives you the opportunity to go to your current vendor to match or beat the price.  If your current vendor cannot match or beat the price, explore the possibilities with the lower priced vendor.

Review cost of labor:

For most agencies labor is the single highest cost. When there is a small percentage increase it can make a big difference.  Tenure can be both a positive and a negative for you and your agency.  The longer a caregiver or administrative support person stay on board, the more they typically are paid…and this is to be expected…but in a time of declining or stagnating reimbursement rates this can end up putting an agency out of business.

Solution: For the administrative staff, you need to review your payroll reports and identify the highest paid group and determine if any cuts can be made.  Review job responsibilities to determine if they can be divided up and taken over by two or three other members.   Then take a portion (maybe 10% to 25%) of the pay from the eliminated position and distribute it among the group taking over the responsibilities.  If you cut one $40K salary that would be $30,000 to $36,000 added to the bottom line.  Tough decisions but the business has to survive and preserve its value.


Curious about the current value of you agency?  Click Here and in less that 24 hours we will deliver a FREE report illustrating the current value of your agency along with comparable sales of agencies just like yours.

Exit Planning Strategies

“Exit strategies may allow you to get out before the bottom falls out of your industry. Well-planned exits allow you to get a better price for your business.”

From: Selling Your Business by Russ Robb, published by Adams Media Corporation

Whether you plan to sell out in one year, five years, or never, you need an exit strategy. As the term suggests, an exit strategy is a plan for leaving your business, and every business should have one, if not two. The first is useful as a guide to a smooth exit from your business. The second is for emergencies that could come about due to poor health or partnership problems. You may never plan to sell, but you never know!

The first step in creating an exit plan is to develop what is basically an exit policy and procedure manual. It may end up being only on a few sheets of paper, but it should outline your thoughts on how to exit the business when the time comes. There are some important questions to wrestle with in creating a basic plan and procedures.

The plan should start with outlining the circumstances under which a sale or merger might occur, other than the obvious financial difficulties or other economic pressures. The reason for selling or merging might then be the obvious one – retirement – or another non-emergency situation. Competition issues might be a reason – or perhaps there is a merger under consideration to grow the company. No matter what the circumstance, an exit plan or procedure is something that should be developed even if a reason is not immediately on the horizon.

Next, any existing agreements with other partners or shareholders that could influence any exit plans should be reviewed. If there are partners or shareholders, there should be buy-sell agreements in place. If not, these should be prepared. Any subsequent acquisition of the company will most likely be for the entire business. Everyone involved in the decision to sell, legally or otherwise, should be involved in the exit procedures. This group can then determine under what circumstances the company might be offered for sale.

The next step to consider is which, if any, of the partners, shareholders or key managers will play an actual part in any exit strategy and who will handle what. A legal advisor can be called upon to answer any of the legal issues, and the company’s financial officer or outside accounting firm can develop and resolve any financial issues. Obviously, no one can predict the future, but basic legal and accounting “what-ifs” can be anticipated and answered in advance.

A similar issue to consider is who will be responsible for representing the company in negotiations. It is generally best if one key manager or owner represents the company in the sale process and is accountable for the execution of the procedures in place in the exit plan. This might also be a good time to talk to an M&A intermediary firm for advice about the process itself. Your M&A advisor can provide samples of the documents that will most likely be executed as part of the sale process; e.g., confidentiality agreements, term sheets, letters of intent, and typical closing documents. The M&A advisor can also answer questions relating to fees and charges.

One of the most important tasks is determining how to value the company. Certainly, an appraisal done today will not reflect the value of the company in the future. However, a plan of how the company will be valued for sale purposes should be outlined. For example, tax implications can be considered: Who should do the valuation? Are any synergistic benefits outlined that might impact the value? How would a potential buyer look at the value of the company?

An integral part of the plan is to address the due diligence issues that will be a critical part of any sale. The time to address the due diligence process and possible contentious issues is before a sale plan is formalized. The best way to address the potential “skeletons in the closet” is to shake them at this point and resolve the problems. What are the key problems or issues that could cause concern to a potential acquirer? Are agreements with large customers and suppliers in writing? Are there contracts with key employees? Are the leases, if any, on equipment and real estate current and long enough to meet an acquirer’s requirements?

The time to address selling the company is now. Creating the basic procedures that will be followed makes good business sense and, although they may not be put into action for a long time, they should be in place and updated periodically.

At United we care about our clients and can provide guidance to help you develop an exit plan.  We even offer an ongoing service to help get you started.  It is by far the best value in the industry and offers ongoing annual updates at no charge…it really is an incredible value.

To learn more about this valuable service click here and provide the requested information.

Latest Merger and Acquisition Trends
The Home Health M & A Market continues to be steady with several small to mid-sized transactions closing over the past eight (8) weeks.  The trend is for continued consolidation in all areas of Home Health including skilled services, non-medical and hospice.  With more rules and regulations on the horizon and stagnating reimbursement rates for state community services waiver programs many agencies are exploring opportunities to exit now while margins are still decent enough to be attractive for acquisition.
If you have been considering an exit and your revenues are in excess of $2 million now would be a good time to explore your options.  CLICK HERE and provide the requested information.  We work with dozens of well qualified  buyers who will act quickly to transactions we represent. We guarantee to deliver an offer to purchase!
The tables below illustrate current demand by Agency type and geographic area:
                        Key
 HIGH 5 or more buyer groups
 MEDIUM  3 to 4 buyer groups
 LOW  1 to 2 buyer groups
Home Health Agencies
State  Demand  State  Demand  State  Demand  State  Demand  State  Demand
AL  HIGH  HI  LOW  MA   HIGH  NM  MEDIUM  SD  LOW
AK  LOW  ID  MEDIUM  MI  MEDIUM  NY  HIGH  TN  HIGH
AZ  HIGH  IL  MEDIUM  MN  MEDIUM  NC  HIGH  TX  HIGH
AR  MEDIUM  IN  MEDIUM  MS  HIGH  ND  LOW  UT  MEDIUM
CA  HIGH  IA  MEDIUM  MO  MEDIUM  OH  MEDIUM  VT  MEDIUM
CO  MEDIUM  KS  MEDIUM  MT  LOW  OK  HIGH  VA  HIGH
CT  HIGH  KY  HIGH  NE  MEDIUM  OR  MEDIUM  WA  MEDIUM
DE  HIGH  LA  MEDIUM  NV MEDIUM  PA  HIGH  WV  HIGH
FL  HIGH  ME  MEDIUM  NH  MEDIUM  RI  MEDIUM WI  MEDIUM
GA HIGH  MD HIGH  NJ HIGH SC HIGH WY LOW
Home Care/Private Duty
State  Demand  State  Demand  State  Demand  State  Demand  State  Demand
AL  HIGH  HI  LOW  MA  MEDIUM  NM  MEDIUM  SD  LOW
AK  LOW  ID  MEDIUM  MI  MEDIUM  NY  HIGH  TN  HIGH
AZ  HIGH  IL  HIGH  MN  MEDIUM  NC  HIGH  TX   HIGH
AR  MEDIUM  IN  MEDIUM  MS  HIGH  ND  LOW  UT  MEDIUM
CA  HIGH  IA  MEDIUM  MO  MEDIUM  OH  HIGH  VT  MEDIUM
CO  HIGH  KS  MEDIUM  MT  LOW  OK   HIGH  VA  HIGH
CT  MEDIUM  KY  HIGH  NE  MEDIUM  OR  MEDIUM  WA  MEDIUM
DE  MEDIUM  LA MEDIUM  NV  HIGH  PA  HIGH  WV  MEDIUM
FL  HIGH  ME  MEDIUM  NH  MEDIUM  RI  MEDIUM WI  MEDIUM
GA HIGH  MD HIGH  NJ HIGH SC HIGH WY LOW
Hospice
State  Demand  State  Demand  State  Demand  State  Demand  State  Demand
AL  HIGH  HI  LOW  MA  HIGH  NM  MEDIUM  SD  LOW
AK LOW  ID  HIGH  MI  MEDIUM  NY  MEDIUM  TN  HIGH
AZ  HIGH  IL  HIGH  MN  MEDIUM  NC  HIGH  TX  HIGH
AR  MEDIUM  IN  MEDIUM  MS  HIGH  ND  LOW  UT  MEDIUM
CA  HIGH  IA  MEDIUM  MO  MEDIUM  OH  MEDIUM  VT  MEDIUM
CO  MEDIUM  KS  MEDIUM  MT  LOW  OK  MEDIUM  VA  HIGH
CT  HIGH  KY  HIGH  NE  MEDIUM  OR  HIGH  WA  HIGH
DE  HIGH  LA  MEDIUM  NV  MEDIUM  PA  HIGH  WV  HIGH
FL  HIGH  ME  HIGH  NH  HIGH  RI  HIGH WI  MEDIUM
GA HIGH  MD HIGH  NJ MEDIUM  SC MEDIUM WY LOW
Interested in discussing the possible sale of your agency?  CLICK HERE and provide the requested information.
Here is a snap shot of all the current home health related businesses listed for sale by price and by region.
Price  # For Sale  Percentage
Undisclosed 87 28%
Under 1 Million 187 61%
1 Million to 2.5 Million  24  8%
2.5 Million to 5 Million  5  2%
5 Million to 7.5 Million  1  .33%
7.5 Million to 10 Million  1  .33%
10 Million to 15 Million  1  .33%
15 million and up  0  0%
Total 306 100%
 Region  # for Sale  Percentage
 Undisclosed  26  8%
 Mid-Atlantic  11  4%
 Mid-South  24  8%
 Mid-West  51  17%
 Mountain  2  1%
 New England  5  2%
 Pacific  65  21%
 Plains  7  2%
 South East  46  15%
 South West 69 23%
Total 306 100%
If you would like for us to contact you to discuss the latest trends and learn more about the sales process please click here and provide the requested information.
United MedCare Capital
12600 Deerfield Pkwy
Atlanta, Georgia 30004
United States
(800) 581-5290

By

July

Interesting Image
The Home Health Advisor
 
“Dedicated to Delivering Education for Building Value, Exit Planning and Mergers and Acquisitions”
Building Agency Value
How can I double the value of my Home Health Agency?  This is a question we are asked often United MedCare Capital.  We have done some research and would like to share what we have discovered.
This is an article written by Mark Wardell on Divestopedia.

Takeaway:A framework for increasing the value of any business by transforming it into a thriving, turn-key operation.

It’s a common adage that every business should be built so that it can be sold. One of the rare certainties in business is that an owner cannot stay at the helm forever. But few owners actually take this to heart. And those that do often leave it to the last minute… an afterthought as they head out the door to retirement.

Of course at this point it’s too late to do anything substantial about it, often causing sellers to leave millions of dollars on the table that should have been in their pocket.

But if this isn’t motivation enough, there are many more reasons why building a sellable business is worth the time and effort it takes up front. After all, a sellable business is also a growing, stable, profitable business that doesn’t rely on the owner for its daily operations. Something every business owner wants, regardless of when they plan on selling.

Simply put, a sellable business is a valuable business. So a daily focus on value creation is key to the achievement of almost any business goal. Whether an owner wants to buy their competitor, franchise their operation, or sell the company to their management team, they need to first build a highly valuable organization.

What is value?

Ultimately, every business draws its value from its intellectual capital, not from the size of its inventory. Products don’t have value, benefits have value, and benefits are intangible. For example, you don’t go to the store to buy a drill bit, you go to the store to buy a solution for making a hole. If someone gave you a better option than a drill bit for making a hole, you’d take it instead, because the product itself holds little value to you. It’s the solution you’re interested in. It’s the solution you’re willing to pay for. The same is true for your business. From a buyer’s perspective, your business is a money machine. And the more effectively it does its job, sitting in the corner pumping out hundred dollar bills, the more it is worth.

If the real value in a business is in its intellectual capital, how do you increase its value? You need to capture and maximize that intellectual capital in a way that is sustainable and sellable. The challenge is, in the majority of businesses, most of this value is stored inside the heads of a few key people. So we need a method for getting it out of those heads and bringing it to life within the business itself.

Maximize Goodwill, Maximize Value

In broad terms, your intellectual capital is reflected in your goodwill value. You can think of this as the “net value” of your business. In other words, it’s the value of your business, over and above its liquidation value (the amount you could sell your tangible assets for). A company’s goodwill value is where most of the opportunity for growth resides.

Because goodwill typically has minimal liquidity (meaning it’s hard to sell in and of itself), it represents a buyer’s greatest risk factor. Therefore, one of the chief concerns of a prospective buyer is how long it will take them to reimburse themselves for the goodwill they purchased, using profits (discretionary earnings) from the company. When all is said and done, the value of a business is usually based on two primary variables. The amount of its discretionary earnings and the length of time those earnings are likely to continue once the business has changed hands. The greater the certainty, the lower the risk. As with all investments, a buyer will typically look for a greater return on their investment when the risk is perceived to be higher. Conversely, all other factors being equal, a buyer will be willing to pay more for a business when the risk is perceived to be lower.

The good news is, given a little time, we can significantly improve these risk factors, increasing the value of nearly any business as a result, often by as much as two or even three times.

The Value Pyramid

The Value Pyramid is a model for increasing the value of any business by transforming it into a thriving, turn-key operation. It visually represents the four stages of operational maturity that a business must move through in order to increase its goodwill value, while simultaneously decreasing its operational dependence on the owner or key management.

Owner-Driven Business

A new business springs to life from the ideas and imagination of an individual, or a group of individuals. So naturally, at its inception, a business is like a young child that is dependent on its parents for absolutely everything. This can be described as an Owner-Driven Business, and it represents the lowest level of the four business maturity stages on the Value Pyramid (see image) because all of the goodwill of the business, that is all of the intangible value over and above the value of the assets, is tied directly to its owner. If you were to remove the owner from the business, it would have no value in and of itself, because the business is unsustainable. It’s ironic that the owner, who is the main reason the company exists in the first place, becomes the biggest limiting factor to its growth.

People-Driven Business

As a business grows and matures, it takes on key people who fill major roles and become part of the driving force of the business. This is called a People-Driven Business. On the Value Pyramid it is assessed a higher value than an Owner-Driven Business because the business is no longer dependent on one person. And yet the goodwill of this business is still tied up in a few key people. It only takes one of these key people to leave, and the business can regress, becoming an owner dependent once again. People-Driven Businesses are also exposed to a certain amount of risk. For example, if a key salesperson leaves, he may take his customer relationships with him, or at least give customers a reason to start looking around for other suppliers.

System-Driven Business

The next maturity stage is a System-Driven Business, wherein operating systems and metrics allow key people, even the business owner, to step away from the business while it continues to function successfully. A System-Driven Business is positioned to grow or sell, and is more attractive to investors because it can run on its own. For example, finding and hiring great people, generating new business leads, and building your products are all tasks that can be measured and maintained through documented systems.

Culture-Driven Business

At the top of the value pyramid is a Culture-Driven Business. A Culture-Driven Business has a strong team of people dedicated to continuous improvement. Not only are systems in place, but employees are encouraged to continuously improve those systems. With a Culture-Driven Business, at the end of each day, the business is better in some way than it was at the beginning of that day.

The outcome of all of this is an “investment grade” business. This is a business that is ready to sell for maximum value when the right buyer comes along, but not under any pressure to do so in the mean time.


Want to find out the current value of you agency and determine if there is a market to sell?  Click Here and we will provide create a report illustrating the current value of your agency and let you know if your agency meets any of the acquisition criteria of the buyer groups  work with.

Exit Planning Strategies
Having an exit plan in place is critical for every business owner.  At United, we work with business owners just like you every day.  Some are prepared and have written plans in place but the majority have nothing in place and we have seen first hand how detrimental this can be to the ongoing success of a business following an unplanned exit.  Even if your plan is to pass it down to children or other family members you must have a written plan in place.

The fact is, most business owners exit their business due to Health, Burn Out, Divorce/Partnership Disputes and Death.  Retirement is seldom the primary reason for an exit.   As you can see, the primary reasons for an exit are often sudden, life changing events.

When one of these events occur, and there is not a plan in place, the business typically suffers and the value can be greatly diminished in a short period of time.  A written exit plan is a necessity for every business owner.

At United we care about our clients and can provide guidance to help you develop an exit plan.  We even offer an ongoing service to help get you started.  It is by far the best value in the industry and offers ongoing annual updates at no charge…it really is an incredible value.

To learn more about this valuable service click here and provide the requested information.

Latest Merger and Acquisition Trends
 If you would like for us to contact you to discuss the latest trends and learn more about the sales process please CLICK HERE and provide the requested information.
The Home Health M & A Market continues to be steady with several small to mid-sized transactions closing last Month.  The trend is for continued consolidation in all areas of Home Health including skilled services, non-medical and hospice.  With more rules and regualations on the horizon and stagnating reimbursement rates for state community services waiver programs many smaller agencies are exploring opportunities to exit now while margins are still decent enough to be attractive for acquisition.
If you have been considering an exit and your revenues are in excess of $2 million now would be a good time to consider moving forward or at least explore your options.  CLICK HERE and provide the requested information.
We work with dozens of well qualified  buyers who will act quickly to transactions we represent.  The tables below illustrate current demand by Agency type and geographic area:
                        Key
 HIGH 5 or more buyer groups
 MEDIUM  3 to 4 buyer groups
 LOW  1 to 2 buyer groups
Home Health Agencies
State  Demand  State  Demand  State  Demand  State  Demand  State  Demand
AL  HIGH  HI  LOW  MA   HIGH  NM  MEDIUM  SD  LOW
AK  LOW  ID  MEDIUM  MI  MEDIUM  NY  HIGH  TN  HIGH
AZ  HIGH  IL  MEDIUM  MN  MEDIUM  NC  HIGH  TX  HIGH
AR  MEDIUM  IN  MEDIUM  MS  HIGH  ND  LOW  UT  MEDIUM
CA  HIGH  IA  MEDIUM  MO  MEDIUM  OH  MEDIUM  VT  MEDIUM
CO  MEDIUM  KS  MEDIUM  MT  LOW  OK  HIGH  VA  HIGH
CT  HIGH  KY  HIGH  NE  MEDIUM  OR  MEDIUM  WA  MEDIUM
DE  HIGH  LA  MEDIUM  NV MEDIUM  PA  HIGH  WV  HIGH
FL  HIGH  ME  MEDIUM  NH  MEDIUM  RI  MEDIUM WI  MEDIUM
GA HIGH  MD HIGH  NJ HIGH SC HIGH WY LOW
Home Care/Private Duty
State  Demand  State  Demand  State  Demand  State  Demand  State  Demand
AL  HIGH  HI  LOW  MA  MEDIUM  NM  MEDIUM  SD  LOW
AK  LOW  ID  MEDIUM  MI  MEDIUM  NY  HIGH  TN  HIGH
AZ  HIGH  IL  HIGH  MN  MEDIUM  NC  HIGH  TX   HIGH
AR  MEDIUM  IN  MEDIUM  MS  HIGH  ND  LOW  UT  MEDIUM
CA  HIGH  IA  MEDIUM  MO  MEDIUM  OH  HIGH  VT  MEDIUM
CO  HIGH  KS  MEDIUM  MT  LOW  OK   HIGH  VA  HIGH
CT  MEDIUM  KY  HIGH  NE  MEDIUM  OR  MEDIUM  WA  MEDIUM
DE  MEDIUM  LA MEDIUM  NV  HIGH  PA  HIGH  WV  MEDIUM
FL  HIGH  ME  MEDIUM  NH  MEDIUM  RI  MEDIUM WI  MEDIUM
GA HIGH  MD HIGH  NJ HIGH SC HIGH WY LOW
Hospice
State  Demand  State  Demand  State  Demand  State  Demand  State  Demand
AL  HIGH  HI  LOW  MA  HIGH  NM  MEDIUM  SD  LOW
AK LOW  ID  HIGH  MI  MEDIUM  NY  MEDIUM  TN  HIGH
AZ  HIGH  IL  HIGH  MN  MEDIUM  NC  HIGH  TX  HIGH
AR  MEDIUM  IN  MEDIUM  MS  HIGH  ND  LOW  UT  MEDIUM
CA  HIGH  IA  MEDIUM  MO  MEDIUM  OH  MEDIUM  VT  MEDIUM
CO  MEDIUM  KS  MEDIUM  MT  LOW  OK  MEDIUM  VA  HIGH
CT  HIGH  KY  HIGH  NE  MEDIUM  OR  HIGH  WA  HIGH
DE  HIGH  LA  MEDIUM  NV  MEDIUM  PA  HIGH  WV  HIGH
FL  HIGH  ME  HIGH  NH  HIGH  RI  HIGH WI  MEDIUM
GA HIGH  MD HIGH  NJ MEDIUM  SC MEDIUM WY LOW
If you would like for us to contact you to discuss the latest trends and learn more about the sales process please click here and provide the requested information.
Here is a snap shot of all the current home health related businesses listed for sale by price and by region.
Price  # For Sale  Percentage
Undisclosed 89 29%
Under 1 Million 184 60%
1 Million to 2.5 Million  27  9%
2.5 Million to 5 Million  4  1%
5 Million to 7.5 Million  1  .5%
7.5 Million to 10 Million  2  1%
10 Million to 15 Million  0  0%
15 million and up  0  0%
Total 307 100%
 Region  # for Sale  Percentage
 Undisclosed  27  9%
 Mid-Atlantic  10  3%
 Mid-South  25  8%
 Mid-West  48  16%
 Mountain  2  1%
 New England  6  2%
 Pacific  68  22%
 Plains  7  2%
 South East  47  15%
 South West 67 22%
Total 307 100%
If you would like for us to contact you to discuss the latest trends and learn more about the sales process please click here and provide the requested information.
United MedCare Capital
12600 Deerfield Pkwy
Atlanta, Georgia 30004
United States
(800) 581-5290

By

June

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The Home Health Advisor
“Dedicated to Delivering Education for Building Value, Exit Planning and Mergers and Acquisitions”

Building Agency Value

Over the past several months we have discussed several factors related to building value for your business and have received some great feedback from many of our readers.  Since the feedback has been so positive we had  a few of our team get together an write a brief report on the “Value Drivers” to focus on as you continue to grow your business.  It is a quick read and something we suggest you print and keep on file.

In addition to the positive feedback regarding building agency value many have asked what the current market value of their agency is and what acquisition criteria buyers are looking for.

To help answer this question and provide access to the “Value Drivers” report we have set up a landing page you can visit and request the information.

Click Here to access the report and request the value of your agency (may have to visit page twice if requesting both options).

Exit Planning Strategies

Having an exit plan in place is critical for every business owner.  At United, we work with business owners just like you every day.  Some are prepared and have written plans in place but the majority have nothing in place and we have seen first hand how detrimental this can be to the ongoing success of a business following an unplanned exit.

The fact is, most business owners exit their business due to Health, Burn Out, Divorce/Partnership Disputes and Death.  Retirement is seldom the primary reason for an exit.   As you can see, the primary reasons for an exit are often sudden, life changing events.

When one of these events occur, and there is not a plan in place, the business typically suffers and the value can be greatly diminished in a short period of time.  A written exit plan is essential for every business owner.

At United we care about our clients and can provide guidance to help you develop an exit plan.  We even offer an ongoing service to help get you started.

To learn more about this valuable service click here and provide the requested information.

Latest Merger and Acquisition Trends

The Home Health M & A Market continues to be robust with several small to mid-sized transactions closing last Quarter.  The trend is for continued consolidation in all areas of Home Health including skilled services, non-medical and hospice.  If you have been considering an exit and your revenues are in excess of $2 million now would be a good time to consider moving forward or at least explore your options.

We work with dozens of well qualified  buyers who will act quickly to transactions we represent.  The tables below illustrate current demand by Agency type and geographic area:

Key
HIGH    5 or more buyer groups
MEDIUM     3 to 4 buyer groups
LOW     1 to 2 buyer groups

Home Health Agencies

State     Demand     State     Demand     State     Demand     State     Demand     State     Demand
AL     HIGH     HI     LOW     MA       HIGH     NM     MEDIUM     SD     LOW
AK     LOW     ID     MEDIUM     MI     MEDIUM     NY      HIGH     TN      HIGH
AZ      HIGH     IL     MEDIUM     MN     MEDIUM     NC      HIGH     TX      HIGH
AR     MEDIUM     IN     MEDIUM     MS      HIGH     ND     LOW     UT     MEDIUM
CA      HIGH     IA     MEDIUM     MO     MEDIUM     OH     MEDIUM     VT     MEDIUM
CO     MEDIUM     KS     MEDIUM     MT     LOW     OK      HIGH     VA      HIGH
CT      HIGH     KY      HIGH     NE     MEDIUM     OR     MEDIUM     WA     MEDIUM
DE      HIGH     LA     MEDIUM     NV    MEDIUM     PA      HIGH     WV      HIGH
FL      HIGH     ME     MEDIUM     NH     MEDIUM     RI     MEDIUM    WI     MEDIUM
GA    HIGH     MD    HIGH     NJ    HIGH    SC    HIGH    WY    LOW

Home Care/Private Duty
State     Demand     State     Demand     State     Demand     State     Demand     State     Demand
AL      HIGH     HI     LOW     MA     MEDIUM     NM     MEDIUM     SD     LOW
AK     LOW     ID     MEDIUM     MI     MEDIUM     NY      HIGH     TN      HIGH
AZ      HIGH     IL      HIGH     MN     MEDIUM     NC      HIGH     TX       HIGH
AR     MEDIUM     IN     MEDIUM     MS      HIGH     ND     LOW     UT     MEDIUM
CA      HIGH     IA     MEDIUM     MO     MEDIUM     OH      HIGH     VT     MEDIUM
CO      HIGH     KS     MEDIUM     MT     LOW     OK       HIGH     VA      HIGH
CT     MEDIUM     KY      HIGH     NE     MEDIUM     OR     MEDIUM     WA     MEDIUM
DE     MEDIUM     LA     MEDIUM     NV      HIGH     PA     HIGH     WV     MEDIUM
FL      HIGH     ME     MEDIUM     NH     MEDIUM     RI     MEDIUM    WI     MEDIUM
GA    HIGH     MD    HIGH     NJ    HIGH    SC    HIGH    WY    LOW
Hospice

State     Demand     State     Demand     State     Demand     State     Demand     State     Demand
AL      HIGH     HI     LOW     MA      HIGH     NM     MEDIUM     SD     LOW
AK    LOW      ID      HIGH     MI     MEDIUM     NY     MEDIUM     TN      HIGH
AZ      HIGH     IL      HIGH     MN     MEDIUM     NC      HIGH     TX      HIGH
AR     MEDIUM     IN     MEDIUM     MS      HIGH     ND     LOW     UT     MEDIUM
CA      HIGH     IA     MEDIUM     MO     MEDIUM     OH     MEDIUM     VT     MEDIUM
CO     MEDIUM     KS     MEDIUM     MT     LOW     OK     MEDIUM     VA      HIGH
CT      HIGH     KY      HIGH     NE     MEDIUM     OR      HIGH     WA      HIGH
DE      HIGH     LA     MEDIUM     NV     MEDIUM     PA      HIGH     WV      HIGH
FL      HIGH     ME      HIGH     NH      HIGH     RI      HIGH    WI     MEDIUM
GA    HIGH     MD    HIGH     NJ    MEDIUM     SC    MEDIUM    WY    LOW

If you would like for us to contact you to discuss the latest trends and learn more about the sales process please click here and provide the requested information.

Here is a snap shot of all the current home health related businesses listed for sale by price and by region.

Price     # For Sale     Percentage
Undisclosed    104    32%
Under 1 Million     177     55%
1 Million to 2.5 Million     33     10%
2.5 Million to 5 Million     7     2%
5 Million to 7.5 Million     0     0%
7.5 Million to 10 Million     1     0%
10 Million to 15 Million     0     1%
15 million and up     0     0%
Total    322
100%

Region     # for Sale     Percentage
Undisclosed     29     9%
Mid-Atlantic     11     3%
Mid-South     22     7%
Mid-West     49     15%
Mountain     2     1%
New England     4     1%
Pacific     65     21%
Plains     9     3%
South East     56     17%
South West    75    23%
Total    322    100%
If you would like for us to contact you to discuss the latest trends and learn more about the sales process please click here and provide the requested information.

By

May

The Home Health Advisor
“Dedicated to Delivering Education for Building Value, Exit Planning and Mergers and Acquisitions”

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We have put together some great information this month to help you grow and solidify the future of your agency.  As always, our commitment is to provide educational content surrounding the fundamentals of the business life cycle including building value, planning for an eventual exit, and recent Merger and Acquisition trends effecting the home health industry.

Building Value for Your Agency

1. Stabilizing Cash Flow – One of the most difficult areas to manage in many home health agencies is stable and predictable cash flow.  In order to successfully navigate this ongoing challenge you must have a pulse on competition, changing reimbursement rates, your operational cost and all factors that impact both the top and bottom line.  If you have a good plan in place you will be able to offset any reductions or increases that effect your cash flow. 

We recommend a Quarterly meeting to review any state and federal legislation proposals and actions that will impact your reimbursement rates, employee benefits and federal and state wage mandates that effect any of your employees.  In addition, you will need forecast the impact vendor supply and service cost increases will effect cash flow and plan how to mitigate these increases.  In addition,  if there is new competition for referrals and clients in your service areas you should  account for some impact to new business.

As the home health industry moves forward, demand for services will increase, however unlike typical markets, it is anticipated we will continue to experience stagnating reimbursement rates for both Medicare and many state Medicaid programs.   This coupled with increasing cost for labor, supplies and other services will have a direct impact on margins and cash flow.  Developing a solid plan and understanding areas of the business that can  afford cuts prior to having to make them will be essential to maintain and build value in the coming years.

Exit Planning Strategies

“Exit strategies may allow you to get out before the bottom falls out of your industry. Well-planned exits allow you to get a better price for your business.”

From: Selling Your Business by Russ Robb, published by Adams Media Corporation

Whether you plan to sell out in one year, five years, or never, you need an exit strategy. As the term suggests, an exit strategy is a plan for leaving your business, and every business should have one, if not two. The first is useful as a guide to a smooth exit from your business. The second is for emergencies that could come about due to poor health or partnership problems. You may never plan to sell, but you never know!

The first step in creating an exit plan is to develop what is basically an exit policy and procedure manual. It may end up being only on a few sheets of paper, but it should outline your thoughts on how to exit the business when the time comes. There are some important questions to wrestle with in creating a basic plan and procedures.

The plan should start with outlining the circumstances under which a sale or merger might occur, other than the obvious financial difficulties or other economic pressures. The reason for selling or merging might then be the obvious one – retirement – or another non-emergency situation. Competition issues might be a reason – or perhaps there is a merger under consideration to grow the company. No matter what the circumstance, an exit plan or procedure is something that should be developed even if a reason is not immediately on the horizon.

Next, any existing agreements with other partners or shareholders that could influence any exit plans should be reviewed. If there are partners or shareholders, there should be buy-sell agreements in place. If not, these should be prepared. Any subsequent acquisition of the company will most likely be for the entire business. Everyone involved in the decision to sell, legally or otherwise, should be involved in the exit procedures. This group can then determine under what circumstances the company might be offered for sale.

The next step to consider is which, if any, of the partners, shareholders or key managers will play an actual part in any exit strategy and who will handle what. A legal advisor can be called upon to answer any of the legal issues, and the company’s financial officer or outside accounting firm can develop and resolve any financial issues. Obviously, no one can predict the future, but basic legal and accounting “what-ifs” can be anticipated and answered in advance.

A similar issue to consider is who will be responsible for representing the company in negotiations. It is generally best if one key manager or owner represents the company in the sale process and is accountable for the execution of the procedures in place in the exit plan. This might also be a good time to talk to an M&A intermediary firm for advice about the process itself. Your M&A advisor can provide samples of the documents that will most likely be executed as part of the sale process; e.g., confidentiality agreements, term sheets, letters of intent, and typical closing documents. The M&A advisor can also answer questions relating to fees and charges.

One of the most important tasks is determining how to value the company. Certainly, an appraisal done today will not reflect the value of the company in the future. However, a plan of how the company will be valued for sale purposes should be outlined. For example, tax implications can be considered: Who should do the valuation? Are any synergistic benefits outlined that might impact the value? How would a potential buyer look at the value of the company?

An integral part of the plan is to address the due diligence issues that will be a critical part of any sale. The time to address the due diligence process and possible contentious issues is before a sale plan is formalized. The best way to address the potential “skeletons in the closet” is to shake them at this point and resolve the problems. What are the key problems or issues that could cause concern to a potential acquirer? Are agreements with large customers and suppliers in writing? Are there contracts with key employees? Are the leases, if any, on equipment and real estate current and long enough to meet an acquirer’s requirements?

The time to address selling the company is now. Creating the basic procedures that will be followed makes good business sense and, although they may not be put into action for a long time, they should be in place and updated periodically.

At United we have an industry leading exclusive  service to assist in the value portion of Exit Planning.  CLICK HERE to learn how we can help!

Home Health Merger and Acquisition Activity

With the more rules and regulations being discussed and the impact it will have on Small to Mid Market Medicare HHA’s many astute owners have determined now may be the best time for an exit.  In other areas of Home Health there is high demand for private pay agencies throughout the country as many HHA’a and Medicaid Agencies are looking to diversify payor sources.  This coupled with demand from Hospitals and some Long Term Care Insurance providers has created a broad pool of qualified buyers for the private pay market.

Here is a look at what is currently available through out the country:

Price # For Sale Percentage
Under 1 million 169 56%
1 million to 2.5 million 27 9%
2.5 million to 5 million 6 2%
5 million to 7.5 million 1 1%
7.5 million to 10 million 0 0%
10 million to 15 million 0 0%
15 million to 20 million 0 0%
Undisclosed 99 33%
Total 302 100%
Region # For Sale Percentage
Mid Atlantic 11 4%
Mid South 19 6%
Mid West 45 15%
Mountain and Plains 14 5%
New England 4 1%
Pacific 60 20%
South East 54 18%
South West 65 22%
Un-Disclosed 30 10%
Total 302 100%

If you have an interest in exploring the sale of your agency, and you generate gross revenues in excess of $3 million, United can guarantee an offer to purchase your agency.

Please Click Here and fill out the Complimentary Consultation form and we will be in touch immediately.  Or, if you prefer call us at 1.800.581.5290 Ext 1.

By

April

The Home Health Advisor
“Dedicated to Delivering Education for Building Value, Exit Planning and Mergers and Acquisitions”

slide2

We have put together some great information this month to help you grow and solidify the future of your agency.  As always, our commitment is to provide educational content surrounding the fundamentals of the business life cycle including building value, planning for an eventual exit, and recent Merger and Acquisition trends effecting the home health industry.

Two Tips to Build Value for Your Agency

1. Audit your Financials – On a quarterly basis (at a minimum…monthly is best)  you should be internally auditing your financials.  The first step is to print a Profit and Loss statement with a comparison of the current month and YTD (comparison to same period in the prior year is a good report as well).  Be sure to include a “percentage of sales” column for each period on the report. 

This will allow you to identify any outliers that are below or above your average percentage of sales when compared to your YTD report.  When you find an outlier you will need to pull a “trail balance” or details from the general ledger for that particular account to determine what may have occurred.  Sometimes it is as simple as posting to a wrong account and in other cases it could be a one time expense.

By performing this activity on a monthly basis, you will be better educated and in tune with your business financials which, in the long run, creates value as you continue the growth of your agency. 

If your accounting software does not allow this type of reporting, we suggest making a change to software, such as quick books, that allows this and other great report options to help monitor the financial health of your agency.

2.  Document your Policies and Procedures –  Ask your self a quick question…Is it better to have written Policies and Procedure Manual versus not having one?  I’m sure your answer to this question is YES. If not, then your chances of maximizing the value of your business will be diminished.  If you already have a Policies and Procedure Manual, be sure to review it annually and  update it with any changes that have been implemented.  Best course of action is to update each time a new policy or procedure is changed or implemented. 

If you do not currently have a Policies and Procedures Manual their are several resources available that will allow you to create a personalized manual.  If you prefer, United offers this service through our consulting services department.  Click Here and we will have someone contact you for more details.

Exit Planning Strategies Part 2

Last issue we discussed the importance of succession planning and delegating day to day activities to other key employees.  This month we will discuss agency “value” and how to determine what your agency is worth.

Most agency owners have no idea how much their agency is worth or how to calculate the value.  When it comes to Exit Planning, this is by far the most important element of your plan since more than likely your agency is the single most valuable asset you own.  It is recommended that you determine value and how it is calculated AT LEAST 5 years prior to your exit.  This will provide you ample time to grow your business and determine what needs to be done to obtain the value/purchase price you will need to support your retirement or next phase of business life.  United offers exit planning services and we also have a FREE online service that will illustrate a rather broad range of value for your agency.  In addition, we will include a comparable sales report  agencies that have recently sold. Click Here and provide the requested information and we will deliver your FREE report directly to you.

Plus, we will let you know if your agency meets any of the criteria of the current buyers we typically engage with for our clients.  This is a great planning tool and a great place to start.

Home Health Merger and Acquisition Activity

Activity continues to be brisk as buyers continue there plans for growth through acquisition.  Several of the largest Home Health providers across the nation have in excess of $600 million earmarked for continued acquisitions.

One of the more recent transactions that has recently closed  was the purchase of Encompass Home Health and Hospice for $750 million.  Jay Grinney CEO of HealthSouth stated, “The deal is indicative of HealthSouth’s desire to expand its presence in the home healthcare industry. Encompass will add 140 home-health locations in 13 states to HealthSouth’s 25 existing home-health agencies across the United States.  HealthSouth’s existing home-health agencies will be integrated into Encompass”.

Smaller transactions are closing monthly as all the larger providers continue to increase their market share.

Here is a look at what is currently available through out the country:

Price # For Sale Percentage
Under 1 million 220 88%
1 million to 2.5 million 24 10%
2.5 million to 5 million 6 2%
5 million to 7.5 million 1 1%
7.5 million to 10 million 0 0%
10 million to 15 million 0 0%
15 million to 20 million 0 0%
20 million and up 0 0%
Total 251 100%
Region # For Sale Percentage
Mid Atlantic 11 4%
Mid South 14 5%
Mid West 42 17%
Mountain 4 2%
New England 4 2%
Pacific 63 25%
South East 49 20%
South West 48 19%
Un-Disclosed 17 6%
Total 251 100%

 

If you have an interest in learning more about the sales process, and your agency is generating gross revenues in excess of $3 million, United can guarantee the sale of your agency.

Please Click Here and fill out the Complimentary Consultation form indicating your interest in selling or buying.

By

March

 

The Home Health Advisor
“Dedicated to Delivering Education for Building Value, Exit Planning and Mergers and Acquisitions”

 slide2

We have put together some great information this month to help you grow and solidify the future of your agency.  As always, our commitment is to provide educational content surrounding the fundamentals of the business life cycle including building value, planning for an eventual exit, and recent Merger and Acquisitions and trends effecting the home health industry.

[Read more…]

By

Why Do More Than 80% Of Healthcare Businesses Never Sell?

Sometimes business owners are their own worst enemies when they try to sell a business. Statistics show that less than twenty percent of businesses sell when they are marketed for sale. This means that more than eighty percent of businesses never sell. A survey of merger and acquisition (M&A) advisors showed some very interesting insight. They were asked to identify top issues that were problematic in the ability of a business to sell successfully. The top response was seller valuation expectations; 69 percent of merger and acquisition advisors indicated this issue as being the most problematic in selling a business.

Top 10 Key Reasons HealthCare Businesses Do Not Sell

  1. The valuation of the business is too high, in some cases by as much as 100 percent.
  2. The business has several family members in top management positions.
  3. The owner is the business. The business cannot effectively operate without the efforts and know-how of the owner.
  4. Lack of diversity by payer source.
  5. The industry is diminishing or threatened by globalization or regulations.
  6. The owner(s) is aging and has slowed down, resulting in diminished revenues.
  7. The owner did not take time to perform exit or succession planning. To properly prepare the business for sale the owner should have engaged in exit planning two to five years prior to selling.
  8. Many of the financial rewards of the business were taken by the owner in various “perks,” which from a business valuation perspective will not make it to the EBIDTA as reconcilable add-backs.
  9. The seller did not take time to become educated on the selling process, especially on the possible ugliness of the due diligence process by the buyer and their advisor.
  10. The owner did not utilize the professional services of trusted mergers and acquisitions advisors.

Without properly preparing your business for sale and arming yourself with a proven mergers and acquisitions process, there will be a huge business valuation gap between what the business seller expects to receive and what a reasonable buyer sees as fair market price.

Selling a business takes years of preparation and the use of a proven process. Additionally, it is time-consuming. A business owner trying to keep their business running smoothly while, at the same time trying to sift through streams of bargain hunters, can be daunting. Without a proven process, a formal business valuation and a good amount of preparation, these bargain hunters will chip away at the sellers asking price.

What About Larger Businesses?

If your company is larger than $10 million in gross revenues, the buyer contact is typically the head of strategy, business development or an outside merger and acquisition firm. The first task is to recognize that reaching these corporate buyers is a very difficult and labor intensive process. In these situations, it is wise to enlist the services of a mergers and acquisitions advisor firm that specializes in the healthcare market that has direct connection to these targeted buyers.

Summary

In summary, it cannot be stressed enough that you need to properly prepare to successfully sell your business. Ideally, two to five years prior to your exit is when you should start planning. It is not very costly and does not take much time, but the results can be phenomenal and will bring about a much higher business valuation, better terms and a faster sale.