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FAQ SELLING A HEALTHCARE COMPANY...

Common questions answered by our expert advisors

Corporate Acquisition Partners understands how selling a home care, hospice, or healthcare business can feel overwhelming and complex. Our expert advisors have over 40 years of experience in healthcare mergers and acquisitions, brokering healthcare businesses, educating and assisting clients through the process, successfully! 

Throughout our numerous transactions in home care, hospice, and healthcare industry, our experts have found many common questions sellers, owners have when considering selling their companies. We have highlighted some frequently asked questions and answers below. 

Q: Why does Corporate Acquisition Partners specialize in brokering healthcare businesses?
A: Our advisors have over 40 years of knowledge in mergers and acquisition experience, they understand the industry, regulatory and compliance matters associated with start-up and change of ownership process with CMS, and are successful in getting healthcare agencies sold. As the industry continues to consolidate, many buyers are entering the market; our firm will successfully market your healthcare company, provide guidance throughout the process to close, and maximizing value. Our specialized knowledge allows us to deliver results to get your agency sold.

Q: How do we protect confidentiality of proprietary information?
A: COAQP understands how important it is to maintain confidentiality throughout the entire M&A process, safeguard proprietary information, de-identifying contact info, and never divulging important data without an executed confidentiality agreement and when neccessary during the buyer|seller process.   

Q: What makes our firm's Buyer and Seller Network successful, and one of the nation’s largest?
A:
COAQP's network of healthcare buyers and sellers was built from over 30 years of experience in the healthcare industry. Through ongoing relationships with active, prospects, and candidates of home healthcare, hospice, medical | dental practices, medical staffing, acute care, long-term care, SNF/ALF, DME/IV/02, diagnostic imaging, and with many other healthcare service providers. This vast experience and long-term relationships give our firm a direct pulse on the healthcare market; knowing which organizations are selling at a premium, what companies are looking to acquire, and how to get complex deals closed.

Q: With your firm's pulse on the market, what's the demand for acquiring home care, hospice, medical | dental practices, and other healthcare businesses in the industry
A: It's a great time to sell! Buyers are looking for opportunities to expand regionally and nationwide under Medicare moratorium, massive consolidation in the market has begun as reimbursement challenges grow, regulatory complexity increases, and as cost containment pressure mounts. Whether you're a Medicare certified home health care agency, Medicaid provider, Private Duty home care provider, Hospice agency, Medical | Dental practice, or other healthcare service company such as in behavioral health, our advisors will help maximize your return on the sale of your business.  

Q: What is a business intermediary?
A: Our firm provides business intermediary services to sellers and buyers in the healthcare market. "Intermediary" is a general term that defines those individuals or firms who specialize in arranging mergers and acquisitions of small to large size companies in a specialized market. Our advisors require over 15  years of merger and acquisitions experience, and over 25 years of direct healthcare experience. All COAQP Advisors have been former Owners, CEOs or CFOs of healthcare organizations. Corporate Acquisition Group is one of the nation’s leading healthcare M&A advisory, business intermediaries in the industry.

Q: What is the main difference between an ASSET PURCHASE and a STOCK SALE?
A: Stock sales typically include the sale of all corporate assets, liabilities, possibly cash, accounts receivable, bank debt, IRS and even CMS liabilities. In an asset purchase, a buyer only buys certain core assets of the company, usually leaving the seller with cash, accounts receivable, and liabilities associated with the company. One key point, whether a transaction is an asset purchase or a stock sale, typically assets and liabilities are entirely negotiable at closing. In the healthcare industry, many deals are asset based because of risk associated with contingent liabilities, but stock transactions are also common. In all cases, it is extremely important to consult with a qualified tax advisor, and an experienced transactional attorney before entering any binding agreements.

Q: How much is my agency worth?
A: Many healthcare service providers sell their companies within a range between three to five times normalized EBITDA; a multiple of EBITDA. This most commonly used formula is a pretax earnings multiplier that assumes an asset purchase where the seller keeps the cash and accounts receivable, and is responsible for any liabilities associated with the company. Larger, more profitable, companies can sell for a premium above the range while smaller, marginally profitable companies usually sell for a discount below the range. To complete a valuation, a company’s financial and operational data is required. Our firm provides “FREE” preliminary evaluation to all owners considering selling their business.

Q: What is required during the due diligence process?
A: Due diligence is nothing more than verification of all representations made by the seller upon which an offer has been based. Due diligence is not initiated until after an offer has been accepted, and a Letter of Intent "LOI" has been executed. Sellers mush expect qualified buyers to thoroughly review all clinical, operational, and financial records. Typically, a representatives of the buyer will want to spend time at the seller’s agency to review requested data. It's kind of like an accreditation survey, but much broader. The buyer will conduct a final analysis of all pertinent information, and proceed to the negotiation of the definitive purchase agreement with the seller. If due diligence verifies the representations of the seller, the definitive purchase agreement should reflect the price and terms agreed upon in the Letter of Intent. Often, price and terms may be renegotiated, in reason, after due diligence if any concerns are discovered, or if the performance of the company changes during this time due diligence is conducted.

Q: How are personal expenses a seller may run through their business considered?
A: The most commonly used metric for valuation analysis is EBITDA. When a private company has extenuating personal (e.g. cars, club dues, etc.) or non-recurring expenses (e.g. fire, lawsuit, etc.), it is appropriate to calculate an adjusted EBITDA, and to present a recast or restated financial statement. This reflects the normalized financial characteristics of the company, along with the actual numbers. It is critical to disclose, explain, and defend each assumption used to adjust the actual EBITDA; clearly, honestly, and transparently.

Q: Do we know buyers, and actively develop ongoing buyer relationships?
A: Our firm has many long-term relationships with buyers who are actively pursuing home care, hospice, DME/IV/02, medical staffing, acute care, long-term care, diagnostic imaging and other healthcare service providers nationwide. With over 40 years experience in the healthcare market, our firm has an exceptional advantage when conducting dedicated campaigns to identify and qualify prospects. We know who is buying at a premium, who is selling for a discount, and where opportunities are in each state.

Q: How long will the process take to sell my Agency / Business?
A: Generally, sellers can expect the process to take 90-120 days from a decision to sell to the close of a transaction. This timeline can vary depending on the market, a state moratorium, etc. A typical transactional process includes: 1) the collection and analysis of data for valuation, 2) the qualification of prospective buyers and the execution of confidentiality agreements, 3) negotiation of the Letter of Intent, 4) the completion of due diligence, and 5) negotiation of a definitive purchase agreement and the transfer of all applicable licenses.