Features
Selling Your Business
In a vibrant health care service merger and acquisition environment, selling a business is easy. If your goal is maximizing value, however, that's an entirely different story. It takes planning. Strategy. Execution. Not unlike what was necessary in building the business in the first place.
There are a multitude of stratagems that sellers can employ to ensure they reach their goals and objectives. But there are 10 strategies in particular that — with virtually no room for error — must be initiated to maximize value in a divestiture.
- Perfect the Timing
For every company, there is a unique and ideal time to sell — and rarely is it when a buyer happens to pop the question.
Rather, the perfect timing arises (1) when a business begins to shift from “hyper-growth” to “mature growth” in its growth cycle; (2) when factors such as reimbursement, operating strategies, supply and demand and others contribute to favorable M&A market dynamics; and (3) when passion turns to burnout, alternative investment opportunities become attractive, the psychic value of incremental equity becomes marginal and other personal goals and objectives are consistent with a sale.
The best-prepared sellers continually monitor these three “decision spheres” to determine when they are in optimal alignment: the point at which both financial and intangible value can be maximized. 1 The importance of this approach can't be emphasized enough. Without question, more value is lost by mistiming a transaction — and more value gained by right-timing a transaction — than by any other miscalculation in a divestiture.
- Determine the Components of Value
Quite simply, you can't maximize value if you don't define its components. Sure, you want cash. The more the better. But for virtually every seller, there are other tangible and intangible transaction elements that can create substantial additional value, value that can help distinguish one offer from another.
For example, for large, platform-sized entities with an owner or management team interested in developing the business further, extraordinary value can be created by selling to a private equity group and retaining a minority interest in the firm going forward.
