The Importance of Choosing the Right Partner When Selling Your Healthcare Business

Ensuring a Smooth Transition and Long-Term Success

By Matt Bodenstedt, Managing Director

Selling a medical practice or other healthcare business is a significant decision that involves numerous factors, including financial considerations, patient welfare, and the future of your professional legacy. One of the most critical aspects of this process is selecting the right partner. The right partner can make the transition smooth and ensure the continued success and growth of the business, while the wrong choice can lead to complications and disappointment. Whether the new partner is a strategic buyer (e.g. another provider) or a financial buyer (e.g. private equity group), six themes stand out when choosing the best partner.

Patient Care and Trust

Your patients have trusted you with their health for years, and their continuity of care should be a top priority. Choose a partner who shares your commitment to patient welfare and quality care. The right partner will uphold the standards you've set and may bring innovations that enhance patient satisfaction. This transition should feel seamless to your patients, maintaining their trust in the business.

Patient care involves the entire patient experience. A partner prioritizing patient-centered care will invest in staff training, improve facilities, and incorporate patient feedback into operations. They will maintain a compassionate environment, ensuring each patient feels valued and heard. You’ll need to assess their commitment to supporting your care model and examine their past experience with healthcare businesses.

Financial Stability and Growth

Choosing a financially stable partner is paramount. A partner with solid financial backing can provide the necessary resources to invest in the business’s growth and improvement. They can enhance facilities, update technology, and expand services, attracting more patients and increasing revenue. Furthermore, a financially secure partner can offer you a fair price for your business.

Financial stability impacts their ability to weather downturns and capitalize on growth opportunities. Look for partners with a diverse portfolio and prudent financial management who can help navigate healthcare complexities, including patient billing and investments in new technology.

Alignment of Values and Vision

A successful partnership is built on shared values and a common vision for the future. Ensure the partner you choose aligns with your professional values and goals. This fosters a harmonious working relationship and smooth decision-making. Discussing long-term goals helps identify the best fit for your practice.

Effective communication and collaboration are essential for a successful transition. Choose a partner who is transparent, communicative, and willing to collaborate. Open dialogue addresses concerns and ensures alignment on goals. A collaborative partner involves you in decision-making processes and seeks your input, ensuring a smooth transition.

Staff Retention and Morale

Your staff is the backbone of your business, and their welfare should be considered during the transition. A partner committed to retaining your team ensures continuity and stability. Maintaining staff morale directly impacts patient care and overall functioning. The right strategic partner integrates your staff into their team and provides opportunities for professional growth. The right financial partner views your team as the foundation for successful growth.

Staff retention strategies include offering competitive salaries and benefits, advancement opportunities, and potentially equity. A partner committed to staff well-being fosters a positive environment, teamwork, and supports continuing education.

Reputation and Credibility

The reputation of the partner you choose will reflect on your business. A well-respected partner with credibility can enhance the practice's reputation and attract new patients. Investigate the potential partner's history, reviews, and standing to ensure they are reputable. Ensure your partner understands healthcare regulations and has a strong track record of compliance.

Reputation is built through consistent service, ethical practices, and positive relationships. A partner with a strong reputation attracts referrals, positive reviews, and recognition within the healthcare community.

Long-Term Commitment

The right partner is committed to the long-term success of the practice. Consider their plans for the future and how they intend to grow the practice. A partner with a long-term vision ensures stability and contributes to sustained growth. Even for a financial buyer intending to sell their stake in 3-7 years, maximizing exit value requires positioning the business for long-term growth.

Long-term commitment involves strategic planning, investment in new technologies, and continuous improvement. A forward-thinking partner prioritizes innovation, seeks expansion opportunities, and adapts to healthcare changes.

How to Choose the Right Partner

Choosing the right partner requires a strategic approach to due diligence:

• Research Potential Partners: Conduct thorough research to identify partners with a track record of success in the medical industry.
• Evaluate Financial Health: Assess financial stability and ability to support growth by reviewing financial statements.
• Check References and Reviews: Seek references from medical professionals and read reviews to gauge reputation.
• Assess Cultural Fit: Ensure alignment of values and vision for a collaborative, harmonious relationship.
• Conduct Interviews: Hold in-depth interviews to discuss strategy, commitment to patient care, and staff management.
• Review Legal Compliance: Verify understanding of healthcare regulations and history of compliance.
• Negotiate Terms: Negotiate favorable terms that protect your interests, clearly defining roles, responsibilities, and expectations of both parties.

The Role of Advisors

Conducting thorough due diligence is critical. Seek professional advice from consultants and legal experts to evaluate and validate all aspects of the partnership. Professional guidance can mitigate risks and ensure a successful transition.

Engaging an experienced investment banker, quality of earnings firm, and law firm can significantly enhance the process. An investment banker manages the process, providing strategic insights and access to a wide network of buyers, ensuring the best value. A quality of earnings firm will meticulously analyze financial records, presenting a clear picture of profitability. A law firm covers legal aspects, safeguarding interests and minimizing risks. Together, they streamline due diligence, provide support, and ensure well-informed decisions.

Selecting the right partner for your healthcare business is vital for ensuring financial stability, patient care continuity, value alignment, and long-term success. Engaging professional advisors can streamline the process and help secure the best choice, safeguarding your legacy and fostering future growth.

© Copyrighted by Matt Bodenstedt, Managing Director, EdgePoint Capital, merger & acquisition advisors. Matt can be reached at 216-342-5748 or at mbodenstedt@edgepoint.com