As a business owner, you always have to make sure that your business is doing everything it can to thrive, especially in the healthcare industry. In the midst of growing your business, there might come a time where you start thinking about how to sell your business. This can happen for a variety of reasons. One of the most common reasons involve going into retirement, which will result in having to find capable hands to place your business in.
Another common reason is that another investor may be able to make the necessary improvements for your business. Whatever your reason is for selling, you can always benefit from a healthcare merger and acquisition advisory firm like Stoneridge Partners.
Here are a few considerations to keep in mind when you start selling your health care business.
What to Consider When Selling Your Health care Business
1. Learn about negotiation
When you are selling your business to the interested buyer, make sure you understand how to negotiate effectively. Negotiations can help you have the upper hand in terms of how much you can sell your business for. Additionally, it can help you clearly see how much the buyers are interested in having your business.
You can find ways to have the upper hand when you and the buyer are negotiating terms or aspects of the business. Always approach negotiations with a proper level of professionalism. Allowing the discussion to get out of hand will only be detrimental for everyone involved.
2. Hire a reliable investment banker
Before contacting a potential buyer, search for a reliable investment banker. Having an investment banker will prove to be more beneficial to the selling process than you may think. Investment bankers will help you with legal processes and they can help you prepare executive summaries to present to interested buyers. At times, investment bankers can even contact potential buyers and help you set meeting times and places, among other things.
3. Look at multiple bidders
There is a chance that there will be many potential bidders who might be interested in buying your business. Weigh your options according to the price range they are offering and how well your business will fare with them. The bidders will compete with each other until you consider one that can give you the best deal out of everyone else. Settling on only one bidder (or the first bidder that comes knocking) can put you at a disadvantage.
4. Plan ahead for the process
The process of selling your business will be long and potentially difficult so be prepared and manage your expectations. You will need to plan ahead for how long the process will take. Even before that, you will have to plan and have everything in order when it comes time to finally sell.
Both the buyer and the seller will have to have everything in order during that time period to reach solid ground in the selling process.
5. Evaluate the buyer’s price
Take the time to evaluate the price that potential buyers have offered for purchasing your business. Consider whether or not the price they have put forth is appropriate, relating to how your business is valued. There are many aspects that go into the value of your business, such as the projected financial growth. Know that you can also always negotiate for a better price, even if the price the buyer has set is already generally good.
6. Prepare for a due diligence investigation
The buyer will usually conduct a due diligence investigation so expect this to be part of the process. This will help them learn what they are getting into when they are buying your business. They will learn about any potential liabilities, what they will be obligated to do, and many other things.
You, as a seller, will need to have all of your documentation in order for this process. By being adequately prepared, you can avoid many potential issues that may prevent the sale from going through.
7. Have a reliable legal team
Before you start the selling process, you should have a solid and reliable legal team supporting you. They will help you in many areas to make sure that the selling process and transition of ownership is conducted smoothly. Your legal team should have plenty of experience and have the skills to help you settle and avoid any potential legal issues. A well-experienced team is preferable over a larger legal team, and less financially heavy.
8. Examine any intellectual property issues
Consider intellectual property (IP) issues when you are ready to sell your health care business. The list of IP will be essential to prepare for buyers so that they will understand the value of your business.
The buyer will usually examine your business for any past IP litigations, along with any current ones, to know what they are getting into. You should have proper documentation prepared for the buyer since it will be relevant to your business.
9. Letter of intent
The letter of intent should be properly negotiated with the buyer during the selling process. Important and relevant details should be included within the letter of intent so that the buyer has all the information they need. Terms such as the price you are selling for, how you will receive payment, and other key pieces of information must be laid clear within this letter.
10. Acquisition agreement
An acquisition agreement will help protect you to a degree. An acquisition agreement is an agreement between the buyer and seller that will help finalize the terms of purchase of the business. Your legal team will prepare the first draft of the acquisition agreement. Factors such as the purchase price and other financial aspects, price adjustments, etc. should be included in the agreement.
When it comes time to sell your health care business, you will need everything in order to ensure a proper transfer of ownership to your buyer. Knowing and understanding these factors will help you be more prepared and know what to expect during the buying process.