Optum's Reach Increases

Optum, a division of UnitedHealthcare, is set to expand its patient care options across the U.S. with the recently announced agreement to acquire DaVita Medical Group.  Optum's medical care delivery system currently includes a network of surgical centers, urgent care centers and a HouseCall program.  DaVita Medical Group will add 300 medical clinics and 6 surgical centers concentrated in Florida, California, Colorado, Washington, Nevada and New Mexico to the system.

DaVita is best-known for its nationwide network of 2,470 outpatient dialysis centers.  This unit is not part of the UnitedHealth/Optum $4.9 billion deal which is subject to regulatory approvals.  >>Read more

Related:
UnitedHealth Increases Footprint

Pays to Think Like a Buyer

Did you know... MT Consulting was founded as a Buy-side broker?  Our first few years were focused on identifying and buying businesses for our clients. Now, as a Sell-side broker, we leverage that buyer mind-set and insight when guiding business owners through the sales process.  Truth is - not all businesses that go to market actually sell.  And, that's a sobering thought to current or soon-to-be Sellers banking on sale proceeds to fund a sizable portion of their retirement. How can Sellers ensure a Payday?  Think like a Buyer!  Understand buyer needs, priorities, "deal killer" issues and prepare the business for a sale accordingly.   Start Here... >> Know the value of your business. Call an expert to perform a current valuation. >> Address internal issues ASAP (especially those impacting profit or revenue); demonstrate business' money making ability. >> Engage advisors to effectively package & position the business.  >> Build trust. Project realistically. Be forthcoming & honest to buyer info requests. Disclose weaknesses upfront. >> Be prepared. Organize key business reports in advance to facilitate  quick responses to buyer inquiries. Identify growth ideas or plans. >> Overcome "deal killers" with creativity. Collaborate with advisors to identify work-arounds or compromises to keep your deal moving forward. With an estimated 4.5 million* firms up for sale within the next 10 years, competition will be intense.  Greater awareness of a buyer's approach today or tomorrow, will reward Seller's with an edge in attracting prospective buyers and negotiating a more lucrative, less time consuming deal.    * The Exit Planning Institute

66% of American businesses are owned by Baby Boomers... who are set to transition their business in the next 5-10 years.*

Is it Time for an updated business valuation? Or, is it Time to sell?  We can help!  Call us at 610-527-8400.

U.S. Dermatology Partners Speeding Along...

U.S. Dermatology Partners (USDP), backed by private equity firm ABRY Partners, actively expanded its geography throughout 2017.   Add-ons in 2017 have included partners in Colorado, Texas, Arizona:

• Medical Dermatology Specialists
• Medical Center Dermatology 
• Lakeway Dermatology
• North Texas Dermatology 
• Southwest Skin Specialists
• Skin Spectrum   

The Dallas-based firm is one of the largest physician-owned practices in the U.S.  Formerly known as Dermatology Associates, U.S. Dermatology Partners currently boasts 70 locations across 7 states (Texas, Kansas, Missouri, Arizona, Colorado, Louisiana and Maryland).  

Congratulations to MT Clients!

Several MT Consulting clients have recently joined the growing Ivy Rehab Network that now boasts 95 locations in the Mid-Atlantic, Midwest and Southeast. 

Congrats...

Rich & Lori - Focus Physical Therapy + Fitness

Gina & Janis - Northern Physical Therapy

Mike & Barb - Fenton Physical Therapy

We wish you all continued success!

UC Giants Merge

Two large healthcare organizations announced the proposed merger of their respective urgent care operations.  Select Medical's Concentra and Dignity Health's U.S. Healthworks will come together to "strengthen the delivery of clinical care, standardize best practices and improve service for employers and employees." according to Dignity Chief Financial Officer Daniel Morissette. 

Dignity's subsidiary, U.S. HealthWorks, operates 250 occupational healthcare centers in 21 states whereas Concentra has 315 occupational health centers in 38 states. 

This transaction will build upon an early 2017 joint venture between Select Medical and Dignity.  The two giants will build and manage a Las Vegas area acute inpatient rehabilitation hospital due to open in 2019.  The joint operation also is expected to include 12 jointly run outpatient rehabilitation clinics.  >>Read more

Healthy M&A projected for Behavioral Health Sector

Market fragmentation continues in the behavioral health sector and so does its appeal among private equity firms. In a report by Stout, an advisory firm, interest in the sector has bounced back in 2017 after a lull in 2016.  In a recent transaction, The Halifax Group announced recapitalization of Florida-headquartered Delphi Behavioral Health Group LLC, a leading substance abuse treatment provider.  Delphi led by CEO Dominic Sirianni and his management team will maintain an ownership position along with The Halifax Group.  >>Read more

Who's In...Who's Out?

It's September...the home stretch for baseball's 2017 regular season.  We'll soon know who's going into post-season play and who's out.

Regardless of whether a team exits the race early or advances to the World Series, all MLB GMs are tasked with addressing team needs to bolster playoff hopes or prep for the next season.  Their needs are generally unique.  Take the Phillies, for example.  This season they needed pitchers while the Mets needed players that stayed healthy.  And so it goes for all 32 teams...

The scenario reminds me of healthcare service platform companies.  Whether backed by private equity or publicly-owned, their management is generally focused on growing or gaining market share.  Take physical therapy - a sector we know well.  There are more than 20 PT platforms in the US, each with a unique seller profile, target geo or specialty and of course, budget.

For practice owners contemplating a sale, evaluating which platforms to approach can be overwhelming - and that's only a small part of the sales process.  As business brokers, our team touches all bases:  scouts the prospective buyers, manages due diligence, negotiates the contract and delivers the best deal for your business.

So, if you're interested in Selling...Call us (610-527-8400).  Let's hit one outta the ballpark together.

Surgery Partners Closes In on Acquisition

Nashville-based Surgery Partners cleared various regulatory hurdles to close in on the acquisition of National Surgical Healthcare by month end.  The acquisition yields a diversified inpatient and outpatient surgical provider with 125 surgical facilities, 58 physician practice locations operating in 32 states. >>Read more  Funding for the acquisition will be provided in part by Bain Capital Private Equity.

When announcing the proposed acquisition earlier this year, Mike Doyle, Surgery Partners CEO expressed the following:

“We are very excited about the acquisition of National Surgical Healthcare and welcome our new partnership with Bain Capital Private Equity.  I would like to welcome the NSH team and physicians. This transaction strengthens our market position and will provide new opportunities to introduce ancillary services to our expanded network of surgical facilities..."

KKR Healthcare Portfolio Increases

Buyout firm, Kohlberg Kravis Roberts & Co. (KKR), is adding life to its healthcare portfolio with planned acquisitions of Covenant Surgical Partners and American Medical Response (AMR).

Nashville, TN-based Covenant Surgical Partners is a leading operator of ambulatory surgery centers with 37 locations. >>Read more  Sellers include DFW Capital Partners, Iroquois Capital Group and PineBridge Investments.

In a deal valued at $2.4 Billion, Envision Healthcare Corp. is selling American Medical Response (AMR) to KKR.  AMR is the nation's largest provider of ambulance services.  The proposed acquisition offers synergy with an KKR's existing portfolio company.  KKR's Air Medical Group Holdings is a leading provider of emergency air medical transportation services to individuals with critical health issues or injuries.  >>Read more

It's All About the Metrics

 "Without data, you are just another person with an opinion. " 

~ W. Edwards Deming 

While it's fine to have an opinion & keen insight.…owners are expected to share more when their business is For Sale.  After all, it’s the numbers that tell the story that prospective buyers want to hear.

Thanks to technology, there are numerous tools to measure metrics and neatly populate data into worksheets, scorecards or dashboards. While the data may visually look good, is it helping you run a business that will impress buyers down the road?

Not all metrics are created equal; Nor does one-size-fit all...

Some performance metrics are meaningful across industries, e.g.: revenue, EBITDA, customer mix, etc.  Others are not. Choosing the right metrics for your business is key.  The most useful ones are simple to track, easy to understand and actionable. 

Whether you're preparing for a sale or not - Focus on business goals that are critical or need improvement.  Measure only what's important relative to your goals.  Avoid the trap of too much data and "Analysis Paralysis".

Relevant but Not Easy

Consider a common example of a metric...BMI.  The index devised by a European in the 1830's is familiar to many but seldom computed without a calculator or Fitbit.  The required conversion of weight (pounds to kilograms) and height (inches to meters) is just too cumbersome for most of us on this side of the Atlantic.     

Relevant, Easy, Actionable  

We work with many healthcare industry clients and have found a few specific metrics helpful in assessing ongoing performance.  If your business is healthcare-related, have you considered adding the following to your analysis...

• Revenue* per FTE: This is a quick way to assess how much money your business generates per full-time employee.  Track it monthly and yearly - it's easy to do and will alert you to both good and bad trends.

• Revenue* per revenue-generating employee: Most businesses have 2 types of employees - those providing billable services & those providing business support.  It's an easy to track metric that can signal the need to ramp up employee productivity.  

• Payroll hours/visit:  Another productivity metric which involves hours of payroll paid in a pay period divided by total patients seen (same pay period).  In a practice not doing complex procedures, the result should range between 1.5 - 2 hours per visit.  (Include salaried and hourly staff in computation.)

*Cash collected 

Have a question about the right metrics for your business?  Don't hesitate to call us, we can help...610-527-8400.

Don't Plan to Fail....

Unfortunately, procrastination may be all too common among business owners... NOT a good trait for those considering selling.  The Exit Planning Institute (EPI) estimates that 4.5 million businesses will go to market over the next decade.  However, only 20 - 30% may actually be sold according to Christopher Snider, EPI CEO.  Recent surveys of business owners by EPI reveal that many have little to no exit planning in place. 

Platinum Financial Planning; jmarkmiller.net

Selling is not a snap decision nor will it happen in a snap...or, at all if you consider the input from EPI's Snider. It's a decision that requires ample thought...

Michael R. Lewis, a retired corporate executive and entrepreneur, suggests that owners consider some of the following questions before initiating the sale process. 

1. What will you do after the sale?
2. Can you replace the income from your business?
3. Does your business enjoy a healthy advantage in the marketplace?
4. Who are potential buyers?
5. What are possible obstacles to a sale?
6. Are you able to run the business and participate in the sale process?

Start the planning now... the experts suggest business owners start preparing for a sale 3-5 years from the desired exit date.  Conducting internal due diligence is one approach to assessing how prepared an owner is for the big event.  And, keep Ben Franklin's quote in mind... to spur you into action.

Investor Feels Good about Urgent Care

CityMD, the New York metro area urgent care provider, will soon go under the Warburg Pincus banner.  The private equity firm is planning to acquire a majority stake in the healthcare services provider.

Warburg's interest is understandable.  CityMD, founded by Dr. Richard Park in 2010, has experienced impressive growth.  Dr. Park grew the operation from a single clinic to 68 locations serving more than 1 million patients annually (through a merger and start-ups). CityMD has a heavy presence in the New York metro area - the City, Long Island, northern New Jersey.  Also, through a partnership with CHI Franciscan Health, CityMD operates clinics in Washington state.

With today's preference for convenience and as high-deductible health plan become more commonplace, patients will likely seek out urgent care centers to address certain health needs.  Many clinics have already expanded their service menu to appeal to patients. In fact, Becker's Hospital Review reports that "adults under age 30 are more likely to visit an urgent care center than a primary care physician."  Increased use of urgent care centers bodes well for the growth of the sector.

IVY Goes WEST

We're pleased to announce that West Physical Therapy is

now part of the growing Ivy Rehab family. 

Dave Franklin, Ivy's President of Midwest Operations, noted 

"West Physical Therapy is an excellent partner 

as we grow our footprint in the Midwest..."

Congratulations to our client and West PT owner, Julie West, and the staff in the Chicago area offices.

Are you Ready to Sell?

One of our clients paid us a compliment...and it MADE OUR DAY!

 “MT Consulting was instrumental in evaluating and packaging our business to create overall value.  Your ability to keep us focused, prepare us for due diligence, and lead us through the process was critical for us to have a successful transaction. This expertise resulted in a great deal, and great relationships moving forward..."   

  ~ Owners of a Large, Multi-site Service Business 

So, what helped to prepare our client for a smooth, successful transaction?  We believe it was our commitment and their buy-in to Seller Due Diligence.  

What is Seller Due Diligence?...  an outside analysis of a Seller’s financial and operational info conducted from a buyer’s perspective prior to marketing a business. (We're experts at performing seller due diligence. In fact, it's a core service provided for our clients.)

During the process, our goal is to verify the accuracy of key business data as well as uncover, correct and/or address any potential buyer concerns upfront.  Also, we often identify adjustments that positively impact business profit. In general, the transparency is appreciated by buyers and works to diffuse issues that could delay or derail a transaction.

Benefits of Seller Due Diligence

• Increased Buyer Confidence
• No Surprises during "buyer due diligence"
• Prepared & Well-packed Data for "buyer due diligence"
• Accelerated Closing
• Enhanced Offer

We’ve been involved in M&A for over 25 years – on the buyer and seller side.  While there are a number of factors that attract a buyer, buttoned-up and prepared sellers are likely to get the greatest attention and a better deal.  Reach out if You're Ready to Sell and would like to better position your business for the best deal. 

ADCS Increases Michigan Presence

ADCS (Advanced Dermatology and Cosmetic Surgery) increased its Midwest presence with another acquisition in Michigan. Oakland Dermatology Associates (Bloomfield Hills, MI) owned by Dr. Neldagae Chisa is now part of the ADCS family.  She has been providing patients with derm care for over 50 years. 

With the addition of Dr. Chisa's practice, ADCS now features 6 offices in the Detroit metro area.  The Florida-based platform derm practice was founded in 1989.  With numerous acquisitions over the last several years, the practice boasts 180 locations in 12 states. 

Related:
ADCS Focus on Michigan
A Win for Bernie..A Clinic for ADCS

Looking for a Sweet Deal?

If you're thinking of selling your business... the next step is a logical one - Plan.

Proactively addressing operational issues positions your business better among Buyers, e.g.: location & revenue growth, increased profit, clean financials, effective systems.  As well, a review of legal and tax issues ensures your interests are recognized and in order in the event of a sale.

Despite pre-sale due diligence, conditions emerge that may sour a deal.  Following are a few examples:

-Over Dependence on Owner:  Can your team effectively support a new owner to sustain & expand the business? Time to transition key client or vendor relationships to team members?

-Star Talent Departures: Consider using non-solicitation and/or non-compete agreements for key employees that can be transferred to the buyer.

-Going It Alone: Owners know how to run their business, sell-side advisors know how to negotiate the best terms and get to Closing. Relying on the expertise of your deal team will save you time, headaches and generate the sweetest return.

-No Growth Plan:  Buyers value and reward an owner's initiative in devising a plan for growth.  This may include an approach to a new geography, new services, new systems to enhance the bottom line.

-Cold Feet:  Selling is emotional so it's understandable when an owner has second thoughts but, it can be costly. To ease the transition - identify life's next step before you exit the business.

No time like the Present to get your business in order... whether a desired sale is close in or years away. Start the process with a business valuation.  It's an excellent tool and will likely reveal key areas to improve or tweak to ensure a Sale on Your Terms.

Goin' North

ABRY-backed Dermatology Associates headed north for its latest acquisition -Texoma Dermatology Clinic. The long established clinic, Texoma, offers dermatologic care in northern Texas and southern Oklahoma.  Clinics are located in Sherman and Paris, Texas.  >>Read more

Reference:
Dermatology Associates quick to pick up 5

Where are you headed this year?

A business valuation typically comes up for discussion when considering a sale.  However, the tool is valuable even if you're years away from selling.  The yearly assessment establishes your starting point.  Key decisions, direction, strategy refinement may follow in an effort to better manage and grow one's business.  Our latest newsletter also addresses the topic.  Take a look HERE.
If you need help with your 2017 valuation, we're here to help.  Call us at 610-527-8400.

NOT a Good Exit Strategy

Defense against cyber attacks critical.

An article in Axial Forum reports a worrisome statistic for business owners:

60% of small businesses are put out of business due to cyber attacks.  

The demise of the business typically results a short time (6 mos.) after the attack due to the financial burden of the clean up and reputational issues.  Average cost for clean up is $690K.  The article author, Gary Miller, outlines ways to be diligent against attack.  Read here

UnitedHealth Increases Footprint

UnitedHealth is expanding its healthcare provider footprint.  This week the healthcare giant announced that Optum, it's health services arm, will acquire Surgical Care Affiliates.  The new Optum company is a chain of outpatient surgery centers - 205 facilities across 30 states.  >>Read more

The addition continues a buying spree over the last few years which has included doctors groups, clinics and a leading urgent care provider, MedExpress.

Coincidentally, MT Consulting brokered MedExpress' first deal - when the provider had only 7 centers.  The deal set the wheels in motion...MedExpress has since substantially increased its presence in the Mid-Atlantic, Southeast and Midwest.  According to UnitedHealth, the MedExpress expansion will continue in 2017.

Healthcare M&A Expected to Increase

Freedman predicts strong Healthcare M&A

Jim Freedman of Intrepid Investment Bankers LLC, expects strong M&A activity in healthcare to continue.  In a November interview, he suggested that the level of industry investment and consolidation in 2016 coupled with the potential repeal of ACA should keep healthcare deal activity robust into 2017.

Freedman is President of the Los Angeles-based firm that provides M&A, capital raising and strategic advisory services to entrepreneurs and middle-market companies. Check out his interview here.