Article

PE and Facility Acquisition: Playing with the Bull, Avoiding the Horns

August 28, 2018

 

I made a promise at the start of the year to write on topics relevant to our work of all sizes.  The larger of the transactional work we do is representing Healthcare PE and large facilities in acquisition mode, as well as providers selling to PE and large infrastructure purchasers.  The sexiest and most often written about topic in relation to potential acquisition is obvious: VALUATION - money - how much will I get in my bank account when that wire hits and we close?  That's the business most sellers care about, or think they care about until the day of closing (and probably a few weeks thereafter).  The problem for many sellers today in healthcare is that the amount that hits the account is most often not enough to send you into the sunset, even if it is enough to get you to turn over your keys.  The more important questions I find many sellers and their counsel often overlook are what happens operationally day 1, day 30, day 90, day 365 post-closing?  How does seller fit into that picture and with what protections?  Many PE or large infrastructure facilities sell transactions by pushing the concept of the seller as "operator" post close, and that may be so, BUT, in most instances a new buyer, new operator means new sheriff in town.  Things are going to change.  The practice you managed for __ years is not yours anymore once that wire hits.  The employees loyal to you, looking to you for direction and perks are no longer yours.  Day 1 things may not change.  Day 30 also.  But, if you are looking for indications of status Day 365, oftentimes that is impossible on Day 1.  The terms of your deal and rights post close must be delineated clearly in your contracts prior to closing.  You will not have any more leverage then you do before you close.  Issues to question - your role post closing.  Your benefits post closing.  Your "all in" compensation.  Your right to control your patient base.  Your right to exit and with what?   

Do not be distracted with glitter and glitz of the corporate razzle dazzle.  Boil it down and get grimy with the details, and for heavens sake, make sure your counsel (for many of you, our office), is involved from the start BEFORE the LOI is signed.  

If you're being courted and you haven't let us know yet, email Jennifer with the status.  


Looking for the KK Healthcare Exchange?  Click Here. 

MISSED OUR RECENT WEBINARS?  CLICK HERE ANYTIME!
Looking for HIPAA and compliance forms?  
Click here to visit our website.
Have a question or comment for Jennifer?
Contact Jennifer at Jennifer@Kirschenbaumesq.com or  at (516) 747-6700 x. 302.
Interested in having Jennifer speak at an event or
at a residency/fellowship program?
Contact Jennifer directly at (516) 747-6700 x. 302 or at Jennifer@Kirschenbaumesq.com
Click here to learn about
K&K's Prepaid Legal Audit/Investigation Defense Now!
PE and Facility Acquisition: Playing with the Bull, Avoiding the Horns - August 28, 2018 - Jennifer Kirschenbaum

Article

PE and Facility Acquisition: Playing with the Bull, Avoiding the Horns

August 28, 2018

 

I made a promise at the start of the year to write on topics relevant to our work of all sizes.  The larger of the transactional work we do is representing Healthcare PE and large facilities in acquisition mode, as well as providers selling to PE and large infrastructure purchasers.  The sexiest and most often written about topic in relation to potential acquisition is obvious: VALUATION - money - how much will I get in my bank account when that wire hits and we close?  That's the business most sellers care about, or think they care about until the day of closing (and probably a few weeks thereafter).  The problem for many sellers today in healthcare is that the amount that hits the account is most often not enough to send you into the sunset, even if it is enough to get you to turn over your keys.  The more important questions I find many sellers and their counsel often overlook are what happens operationally day 1, day 30, day 90, day 365 post-closing?  How does seller fit into that picture and with what protections?  Many PE or large infrastructure facilities sell transactions by pushing the concept of the seller as "operator" post close, and that may be so, BUT, in most instances a new buyer, new operator means new sheriff in town.  Things are going to change.  The practice you managed for __ years is not yours anymore once that wire hits.  The employees loyal to you, looking to you for direction and perks are no longer yours.  Day 1 things may not change.  Day 30 also.  But, if you are looking for indications of status Day 365, oftentimes that is impossible on Day 1.  The terms of your deal and rights post close must be delineated clearly in your contracts prior to closing.  You will not have any more leverage then you do before you close.  Issues to question - your role post closing.  Your benefits post closing.  Your "all in" compensation.  Your right to control your patient base.  Your right to exit and with what?   

Do not be distracted with glitter and glitz of the corporate razzle dazzle.  Boil it down and get grimy with the details, and for heavens sake, make sure your counsel (for many of you, our office), is involved from the start BEFORE the LOI is signed.  

If you're being courted and you haven't let us know yet, email Jennifer with the status.  


Looking for the KK Healthcare Exchange?  Click Here. 

MISSED OUR RECENT WEBINARS?  CLICK HERE ANYTIME!
Looking for HIPAA and compliance forms?  
Click here to visit our website.
Have a question or comment for Jennifer?
Contact Jennifer at Jennifer@Kirschenbaumesq.com or  at (516) 747-6700 x. 302.
Interested in having Jennifer speak at an event or
at a residency/fellowship program?
Contact Jennifer directly at (516) 747-6700 x. 302 or at Jennifer@Kirschenbaumesq.com
Click here to learn about
K&K's Prepaid Legal Audit/Investigation Defense Now!