Everything You Always Wanted to Know About Selling Your Healthcare Company But Were Afraid to Ask

17 December, 2019

With access to leverage and large buckets of capital, private equity firms, family offices and other strategic acquirers are actively pursuing deals in today’s healthcare market and are willing to pay up for quality deals. That’s great news for sellers but it doesn’t let them off the hook for doing their part during the transaction process. Like any other M&A transaction, selling a healthcare business has its challenges.

To ensure a smooth transaction and high valuation, sellers need to understand the different types of buyers in the marketplace and which type best fits their needs. Finding the right buyer depends largely on what the seller wants to achieve from the transaction and understanding financing and M&A alternatives. For sellers, there is a wide range of financing options and the amount of equity sold.
For example, sellers can pursue:

  • A 100% Equity Sale. This option yields a high volume of cash at close but the seller usually gives up all control of the business and shareholders forfeit future upside value.
  • A Majority Sale. In a Majority Sale the seller gives up more than 50 percent ownership in the company and thus the ability to ultimately control its direction, however, a portion of future upside value is retained.
  • A Minority Sale. In a Minority Sale the investor or partner owns a minority interest in the company while the parent company maintains more than 50 percent ownership, and thus, ultimate control. Minority sales generate cash at closing while retaining future upside potential for the majority stakeholders.
  • Pure Debt Raise. A Pure Debt raise is an obligation to repay money but without any sharing of profits or increases in value. This can be capital used to grow the business without losing business control or future upside value for stakeholders.

In addition to financial considerations, there are non-financial factors to evaluate when considering a buyer. These non-financial considerations often include:

  • The buyer’s experience in the seller’s field.
  • The value-add the buyer brings beyond capital, such as technology, advisors and connections with downstream acquirers.
  • The chemistry between company management and the buyer.
  • The stated goals of the buyer, such as geographical expansion, expansion into adjacent spaces or roll ups with other practices.
  • The buyer’s preferred timeframe to exit.
  • The buyer’s plan and timing for bringing in a new management team.

If you are in the healthcare sector and are considering selling your company or raising capital the process can be daunting. In response, ShareVault has invited John Selig, Managing Partner of WaveEdge Capital, to present a 60-minute webinar entitled “Everything You Ever Wanted to Know About Selling Your Healthcare Company But Were Afraid to Ask.” John Selig has over 20 years of experience in the Healthcare sector and is an M&A attorney. During the webinar John will explore:

  • M&A and financing alternatives available to healthcare sellers
  • The different kinds of buyers, their roles, and what’s best for the seller
  • The key issues for sellers around selling equity in their business
  • Typical financing and M&A processes

Please join us on Wednesday, December 18th as John dives into this hotbed of M&A activity and explains the important things today’s healthcare sellers need to know in order to make the right decisions and maximize the value of these transactions.