Consider an M&A Advisor like Oleksiy Nesterenko
- startupfinance
- Jan 10, 2016
- 3 min read
Looking to Sell a Healthcare Company - Consider an M&A Advisor like Oleksiy Nesterenko
Perhaps the most important business transaction you will ever pursue is the sale of your business. Many healthcare business owners attempt to do it themselves and when asked if they got a good deal, many respond with "I think so," or "I got my asking price," or "I really don't know," or "It was a disaster." Often times these very capable business people approach the sale of their business with less formality than in the sale of a home. The purpose of this article is to answer the questions - Why would I use an M&A Advisor and what am I getting for the fees I will pay?
1. Confidentiality. If an owner tries to sell his own business, that process alone reveals to the world that his business is for sale. Employees, customers, suppliers, and bankers all get nervous and competitors get predatory. Engaging an advisor protects the identity of the company he represents for sale with a process designed to contact only owner approved buyers with a blind profile - a document describing the company without revealing its identity. In order for the buyer to gain access to any sensitive information he must sign a confidentiality agreement. That generally eliminates the tire kickers and deters behaviors detrimental to the seller's business
2. Business Continuity. Selling a business is a full time job. The healthcare business owner is already performing multiple functions instrumental to the success of his business. By taking on the load of selling his business, many of those essential functions will get less attention, sometimes causing irreparable damage to the business. The owner must maintain focus on running his business at its full potential while it is being sold.
3. Time to Close. The faster the sale, the lower the risk of business erosion, customer defection, employee problems and predatory competition.
4. Large Universe of Buyers. Intermediaries subscribe to databases of the various healthcare business categories that enable them to screen for buyers that are in a certain SIC Code and have revenues that would support the potential acquisition.
5. Marketing. A Merger and Acquisition Firm can help present the business in its best light to maximize selling price. They understand how to recast financials to recognize the EBITDA potential post acquisition. Higher EBITDA = higher selling price. He understands the key value drivers for buyers in a particular healthcare segment and can help the owner identify changes that translate into enhanced selling price.
6. Valuation Knowledge. The value of a healthcare business is far more difficult to ascertain than the value of a house or even the value of a "bricks and mortar" type business. Every business is unique and has hundreds of variables that effect value. Investment Bankers have access to business transaction databases, but those should be used as guidelines or reference points.
7. Balance of Experience. Most corporate buyers have acquired multiple businesses while sellers usually have only one sale. In one situation we represented a first-time seller being pursued by a buyer with 26 previous acquisitions. Buyers want the lowest price and the most favorable terms.
A good investment banking firm can help the smaller company navigate and recover from this situation. Their experiences with businesses that engaged their firm as a result of an unsolicited offer from a buyer have been quite instructive. The eventual selling price averaged over 20% higher than the first offer. In no case was the business sold at the initial price.
To conclude, seller's intermediary helps reduce the risk of business erosion with improved confidentiality while allowing the owner to focus on running the business. The M&A Advisor like Oleksiy Nesterenko led sale helps maximize sales proceeds by involving a large universe of buyers in a competitive bidding process. Finally, the investment banker can improve the likelihood that the sale closes by buffering buyer - seller negotiations and by balancing the experience scales.
Oleksiy Nesterenko is a finance & strategy consultant for Business startups and Merger and Acquisition Advisor and has set up Oleksiy Nesterenko Startup Finance provides the needed financial and strategic insight that enables businesses to thrive, representing owners in the sale of privately held technology based businesses. Mr. Oleksiy provides Wall Street style investment banking services to lower amid market companies at a size appropriate fee structure. Contact him at +1 (310) 710 4248 or info@oleksiy-nesterenko.com
For more info visit him at: https://angel.co/oleksiy-nesterenko
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