Feb 22, 2024
In the second part of the podcast, host David Mandell continues his conversation with investment banker Clint Bundy and private equity principal Matt Ebbel, focusing on the factors that contribute to successful mergers and acquisitions (M&A) in the healthcare sector, including medical, dental, and veterinary practices. They delve into what makes a practice an attractive acquisition target, the importance of cultural and strategic alignment, and future trends in healthcare M&A.
Matt Ebbel emphasizes the importance of considering the "day after" a sale, where physicians might find themselves with new responsibilities and a change in their work dynamics. He stresses the need for ownership alignment, candid dialogues about success, and the importance of evaluating the financials, doctor and staff retention, and the culture of a practice. Red flags include a lack of alignment, high turnover, and compliance issues. Ebbel also touches on the importance of setting realistic expectations regarding income adjustments post-acquisition to ensure a fair and sustainable deal and the value of physicians working with a financial advisor to see how a deal impacts their personal financial goals.
Clint Bundy outlines the "three legs of the stool" approach to evaluating practices: stability, profitability, and growth, with scale as a possible fourth factor. He emphasizes that while scale is beneficial, it's not a must-have for a practice to be considered strong. Bundy also highlights the necessity of running a competitive process to ensure the best offers for a practice, stressing the importance of certainty to close alongside the financial offer.
Both guests agree on the critical role of cultural fit and strategic alignment between the acquiring and acquired entities. They advise practices to conduct thorough due diligence on potential partners, considering factors like the platform's resources, commitment to medical quality, and the investment partner's track record and vision for leveraging technology.
Looking ahead, both Bundy and Ebbel express optimism for the M&A market in healthcare, despite recent macroeconomic challenges. They anticipate continued interest from private equity and possibly an increase in activity as market conditions stabilize. Ebbel specifically mentions potential public offerings by major players as a future benchmark that could spur more interest in the sector.
In summary, the podcast provides valuable insights into the complexities of healthcare M&A, offering practical advice for practices considering a sale or partnership. The discussion underscores the need for strategic planning, thorough due diligence, and alignment of values and goals to ensure successful transactions in the ever-evolving healthcare landscape.
Learn more, incluing key takeaways and insights, as well as being able to listen to this and past episodes by visiting www.physicianswealthpodcast.com.