ThE “ENhANcEd PROcESS” OF SEllING hEAlThcARE SERvIcE cOmPANIESysis typically will eliminate certain buyers based on an overall ranking
of their initial offers. This step requires professional assistance and is
critical as it streamlines the process to focus on the best acquirers, not
wasting any time with the “also rans.” We have found that this step also
creates a dynamic that results in buyers giving a better offer first, which
starts the negotiation at a higher level than if an acquirer knows they are
the only buyer. We firmly believe and have clear evidence to suggest
that this aspect of the overall process will increase values by greater
than twenty five percent as compared to a typical sale process.
For our sample company, we narrowed the field from seven that made
offers to three that would move to the next step in the process, the man-
agement meetings.
The three or so finalists are then invited to meet face-to-face with the
owners of the company. These meetings typically will take place near
the seller’s business, but not on-site so as to avoid any breach of con-
fidentiality. Typically a hotel, or at the sellers accounting or legal firm
works well. We spend hours preparing sellers to formally present their
company to the acquiring companies, including a custom presentation
to educate the acquirer on the operations and financial results of the
business, the management structure, the marketing and development
systems, and opportunities and specific plans for growth. These meet-
ings are critical, as the next step will be to request the acquirers to make
their “best offer” in the form of a written Letter of Intent (LOI) within
one week from the time of these meetings.
LOI’s are then received, analyzed and compared. A negotiation will then
be initiated with those companies that have been chosen based on a com-
bination of the management meetings and their final offers. In some cases
negotiations commence with all of the finalists, or sometimes, just one.
With our sample company, one of the acquiring companies stood out
based on a Letter of Intent that showed a return to the sellers that was
20% higher than the other two offers. They also felt that they would work
best with that company based on critical values that were a clear match.
The negotiating process has also been shown to increase price, but just
as importantly, to improve the structure of the offers. It also ensures that
you have truly chosen the best buyer that is available in the market, as
no rocks are left unturned.