M&A: ‘Protect the mothership’

Wednesday, October 9, 2013

ORLANDO, Fla. – All around us, HME companies are buying, selling, merging and generally moving forward with some sort of plan, says Jonathan Sadock.

“Doing nothing is not an option,” said Sadock, managing partner/CEO of Paragon Ventures during his session, “Exploring Strategic Options—Developing M&A Strategies for Healthcare Reform,” on Wednesday.

What’s propelling providers into action? While it may seem like dark days right now for the industry, HME is here to stay, Sadock said.

“In the healthcare industry, one thing is different,” he said. “Our demand doesn’t go down and technology is propelling the demand.”

That, combined with the Affordable Care Act, is also attracting outside players to the industry, Sadock said.

“The ACA is an attractive investment for private equity,” he said. “It’s a big nut. It’s so big, it shut down our government.”

So, what’s a provider to do if he or she decides the time is right to sell?

“The first thing is to protect the mothership,” said Sadock. “Don’t make decisions that have a negative impact on your business.”

Providers should ask themselves what they want to do with their company’s equity and how they want their company to grow, Sadock said.

Other food for thought: Make a candid assessment of your EBITDA; perform due diligence; don’t make assumptions; and, above all, treat your employees well throughout any buying or selling process, he said.

“The strength of most businesses is the employees,” Sadock said. “They are important in M&A. A buyer doesn’t want to buy a business only to have key employees leave.”