Mergers and acquisitions (M&As) have significantly impacted private practice medicine over the past five years. Many physicians are aware of this trend and have either considered or completed a practice sale or merger. The article, authored by David B. Mandell, JD, MBA, and Jason M. O’Dell, MS, CWM, highlights three essential steps for a successful practice M&A:
Financially Prepare the Practice: This involves organizing books and records and maximizing the practice’s value to potential acquirers. Implementing processes and procedures for non-clinical aspects can add value to the practice. It’s also crucial to maximize EBITDA (earnings before interest, taxes, depreciation, and amortization) to give potential buyers a clear picture of the practice’s profitability.
Find the Right Advisory Team: Assembling a team of experts, including personal financial advisors, CPAs, M&A attorneys, and investment bankers, is crucial. These professionals can guide physicians through the complexities of M&As, ensuring that the practice’s interests are protected and the best possible deal is achieved.
Determine the Right Type of Transaction: M&As are not one-size-fits-all. Physicians must decide whether they want to sell their entire practice, a majority or minority stake, or consider a combination of equity and debt. Larger practices might consider becoming a platform practice, acquiring smaller practices in a region, while smaller practices might find it more beneficial to merge into a larger entity.
In conclusion, as M&As continue to shape the medical landscape, it’s essential for physicians to be well-prepared and informed to navigate potential mergers or sales effectively.