M&A: Get your stories straight 

DALLAS – While uncertainty in the broader economy has caused a slowdown in M&A, when buyers and sellers know what they want, deals are getting done, said experts at Medtrade on Tuesday. 

“Why do you want to transact?” asked Brad Smith, managing director/partner at Vertess. “Why do you want to buy or sell? (If you’re selling), give a buyer enough information so they can make an educated decision. Make it a conversation. Have calls; get to know these people.” 

Smith co-presented “Structured for Success: DME M&A Explained” with Jonathan Sterling, an attorney with Brown & Fortunato. 

The V word 

For smaller providers looking to sell, valuation can be an especially tough part of the process, said Smith. 

“It’s your baby,” he said. “You think, ‘I put all this hard work in, I need to get X of out it.’ You can get a great value for your business, but it can be difficult.” 

Smith recommended using an expert in the DME industry for valuation, rather than a CPA or other financial professional. 

“CPAs will pull market comps, but it doesn’t tell the full story,” he said. “Then you have a misalignment. The worst thing is to expect to get X, and you get offers of Y.” 

Contract as currency 

When it comes to what makes a business attractive, product mix, growth and contracts come into play, said Jonathan Sterling, an attorney with Brown & Fortunato. 

“Contracting is a big deal,” he told attendees. “(Buyers want to know) ‘Can you buy into that network?’” 

Fools rush in 

M&A transactions follow a detailed and lengthy structure and timeline that not only includes valuation but also letters of intent, due diligence, closing, integration and post-closing matters. Take your time, said Sterling. 

“Every party wants to move quickly, but don’t fall victim to a timing squeeze,” he said. “It’s amazing how many people panic and come to terms they probably wouldn’t have agreed to if they’d had more time.”