M&A: Don't skip to last chapter

 A. Every business, at some point, will either be sold, bequeathed, merged or closed during its lifetime. As a business owner you have a responsibility to protect and realize the value of what is usually your single most valuable asset, your business. Often, this process is referred to as exit or succession planning.

Just as you make many important decisions to start, build and grow your business, it is vitally important that you properly prepare and plan your eventual exit or business succession. Just as you wouldn't read only the last chapter in a book, you need to read all the chapters leading up to your exit.

This process starts with building a living dashboard on your business performance. This includes tracking and monitoring key metrics on a monthly basis and understanding regulatory issues and market fluctuations specific to your specific niche. The metrics may include the obvious P&L analysis and balance sheets along with reimbursement by product line and payer. Employee performance metrics are also an important aspect which should not be ignored.

Once you have gathered the essential data, engaging with a market professional or advisory will help you to benchmark valuation. There are many factors which impact valuation and it is important to anticipate hurdles and deal with them proactively. Strategic options come in many forms and flavors ranging from an outright sale to a recapitalization of the business. For HME companies, sometimes a merger of equals can substantially scale and produce a stronger, more valuable business.

With your valuation benchmark in hand and an understanding of the various types of transactions you may pursue, it's time for a little soul searching and goal setting. Most transactions perform best when the business is not in distress. By monitoring these key metrics and market valuation, you can weigh your goals with the current market and when the time is right, execute a well-planned and successful transaction.