Sell? Buy?

I have had many discussions with providers these past few months about whether they should consider selling their companies. I never can answer that question because it is such a personal one. What I always do is allow the owner to tell me about his company: how much volume it produces annually, which disciplines they provide, who their customers are, and we go on and on.

I understand that hanging over DME today are many changes that will affect the industry, whether it is the effects of the Medicare Modernization Act, bids, reduced reimbursements, competition, accreditation or any of the other problems that abound. None of this is new. In the more than 50 years that I have been involved with health care, there always have been problems to resolve. And this happens in every industry, not just DME. We are not unique.

When the pressure starts to mount, many providers think it is time to sell. I will not comment. However, before making such a decision there are several things that should be accomplished so that you will make the correct one.

You and your accountant should study which disciplines provide the best volume and which the best profits. Then you should study how your market may have changed since you began the operation. The new demographics of the community can provide some interesting guidelines. I also suggest looking at all of your competitors. Are they chains, are they run by a hospital or are they independents? How successful are they?

When another company offers to purchase your company — whether they are a conglomerate, a hospital or a competitor — know one thing: They have already done very careful market research and have assured themselves that there will be a good return on the investment. You, too, have to do the same; study the market. (Use the Chamber of Commerce as a source when you do your research. I have always been impressed by what one learns from this resource.)

If, after all of this study, you still feel it is time to sell, then do it. But if there is any doubt in your mind, then think instead about becoming a purchaser. Rather than selling your company, consider buying one. In order to do this correctly you should work with a good professional business broker. The broker can assist you in arriving at the correct price to pay. With his knowledge of the laws in the community and the market potential, a good broker can help make the deal go smoothly.