Health law is the federal, state, and local law, rules, regulations and other jurisprudence among providers, payers and vendors to the healthcare industry and its patient and delivery of health care services; all with an emphasis on operations, regulatory and transactional legal issues.
Whether you’ve been in practice for years or you’re just graduating, buying an existing dental practice can be a great way to quickly enter into an already established patient base without the pains of starting up from scratch. While it may seem like a daunting task, the right team can make the purchase transaction flow as smoothly as possible. Here’s a list of important things to consider when negotiating the purchase.
COVID is front and center in all aspects of everyday life and has shined light in the strangest of places that were usually in the dark. In healthcare the laboratory space has always taken a backseat to other sectors in terms of recognition and value. The current climate in the lab space has shifted and it is not an illusion, labs are front and center.
COVID has taken its toll on areas of the economy and investors are certainly one of the first to become aware of this situation. Clinical laboratories are currently an attractive acquisition target and the reasons are numerous, sectors like retail, entertainment and travel are performing poorly and investors are shifting their investment dollars into healthcare and technology. Investors are looking for growth and profitability and are finding it in healthcare. Mergers and Acquisitions (M&A) is nothing new in the lab industry, but now careful consideration is required when it comes to deciding the appropriate time to sell your lab.
Many young dental professionals are presented with the opportunity to join a practice after graduation. Making an informed decision and negotiating a fair contract can be difficult but will ultimately pay dividends for years to come. Here are some items to consider when reviewing and negotiating your employment contract. read more
Home health agencies everywhere have become the favorite targeted acquisitions of “the financial world.” Apparently, there is one seminar that every buyer attended convincing buyers or all kinds (buyers with money, buyers without money, buyers in the private equity space) that:
HHAs are ripe for aggregation because the industry is disaggregated; and
HHA owners lack business sophistication necessary to bring their businesses to the “next level.”
Unfortunately, some of the buyers lack any true industry experience and are looking at acquisition targets solely from a financial perspective. They’re looking principally at business financials and nothing else. And, worse yet, they’re not focused on the centrality of operational expertise. All of which can come crushing down on the head of seller financed acquisitions. In other words, if the buyer is paying the purchase price over time, the seller is effectively financing the transaction because the purchase proceeds are (in theory) coming from seller operational profits. This may make the transaction possible, but operations will ensure company profitability and growth, which is gonna drive seller interest.
So what? A lot! As current HHA owners know, the secret sauce is in not financial analytics. It’s in the operations! And the financial due diligence is just a part of the equation. What about regulatory due diligence? What about knowing where the bodies are buried (legally speaking)? What are the payer relationships? What are the marketing relationships? What is really driving the business? Who is the key reason why the HHA is successful? It is typically one or two people. And missing that or retiring them is a recipe for disaster for buyers and seller financed sellers. As is missing illegal payments made to induce patient referrals, which can shut down even a completed transaction in a heartbeat. None of this is part of the usual [financial] due diligence!
Lawyers might say “Yeah, but there will be plenty or reps and warranties to cover the transaction. And the indemnification sections will be tight.” So what? The buyer doesn’t want a pig in a poke. They want a reliable and growing income stream. Details matter. Especially the details both buyers and sellers are missing!
Further, if a buyer thinks they can buy an HHA on the cheap (1) without proper due diligence, (2) with lawyers waiting to get paid if the transaction closes and funds, and (3) with heavy seller financing, think again. If you’re dealing with a buyer with pockets (or you have pockets) and will spend the right money on proper due diligence, the right (and experienced) marketing and management, have at it! The HHA industry is ripe for aggregation. But doing it in “the new way” isn’t new at all. It’s just defective and a recipe for lots of heartache…and litigation.
Real buyers love due diligence. They love to measure twice (three times is even better!) and cut once. They love either understanding the business they’re buying or buying the operational talent. And they understand and embrace the notion of putting hard money to work. They don’t try to buy something for nothing or find lawyers who don’t have enough work to do who are willing to work for free. Real buyers are not trying to get something for nothing. And they don’t allow a financial flow focus to blind them to the daily “wax on; wax off” aspects of the business. Doing so would disappoint both sellers and buyer investors.
It’s great to see so much activity in the HHA space. But the ones that win and stay will only be the ones that do it the old fashioned away—They’ll Earn It!
Chase Howard will present this live lunch n’ learn webinar for attendees interested in learning more about how to effectively prepare for the sale of their dental practice. He will cover issues like who and when to contact when considering a sale, proactive steps to lessen business disruption, when to tell your employees, and other important transition topics.
Preparing your dental practice for sale is quite possibly the biggest decision one can make! Understanding the legal landscape, the investment trends and options as well as what can optimize your business’ sale is essential. This webinar platform provides attendees to ask questions and chat directly with a highly qualified health law attorney.