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UlTImATE SUccESS GUIdE

At this point, the seller’s attorney will do a review of the Letter of Intent.
A couple of the key items in the LOI that are somewhat legal in nature,
but extremely important are the “non shop” provision and “access to
employees and referrals sources.” It is important to limit the “non shop”
period to ninety days or less, as this will
stipulate that you are no longer able to talk
to any other buyer during that time period.
In addition, be sure to stage any access to
your employees and referral sources to the
end of the due diligence period, as this can
be highly sensitive to those sources and
staff. In our sample company, we were
able to limit the “non shop” period to 60
days, which was a huge plus for our cli-
ent. If the process started to deteriorate for
any reason with the chosen acquirer, they
could go back to the other companies who had made offers, and they
would still be fresh and ready to proceed. This is another major advan-
tage to our Enhanced Process.

PhAse FoUR - the DUe DIlIgenCe AnD legAl PhAse

The final phase of the transaction process is where the real work starts,
as the legal process can be tedious and the initial purchase price must
be protected. Typically the acquirer will take responsibility to provide a
list of all due diligence information that they would like to review. I was
told by a Financial Buyer many years ago that due diligence is similar
to “a living autopsy.” Our approach is to set up an electronic secure
website that will organize and maintain all of the due diligence materi-
als. We create a folder representing each request and scan and place the
requested documents in those folders. If an item is unavailable or does
not apply, we have the seller create a one page simple document that
states just that, and is signed by the seller. This protects the seller if the
buyer would ever come back later stating that they were not provided
with all of the requested information.

Phase four will also initiate the legal work. We always recommend to
our clients that they utilize an attorney with healthcare transaction ex-
perience and we mean real experience. If they do not have an attorney,
we assist them in finding a well-qualified healthcare M&A attorney. The

Negotiation 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.”