Strategies for Successful M&A: How and When Does it Make Sense for My Organization?

Mergers and acquisitions (M&A) have become a popular strategy for health care service companies seeking to expand their market presence, acquire new capabilities, and drive growth. In the intellectual and developmental disabilities (I/DD) world, many smaller companies and nonprofits are realizing more scale efficiencies by merging. Developing an exit strategy may also be a great option for owners wanting to monetize their years of hard work and dedication to building a company. The crucial elements in the M&A process are comprehensive planning and devoting the necessary resources to deliver the anticipated outcomes.

Identifying M&A Goals in Health Care

When entering the M&A process, health care organizations should always clearly define their goals. Acquisition strategies might include expanding service lines, entering new markets, or obtaining proprietary technology. Conversely, divestiture goals could focus on shedding non-core assets to concentrate on high-performing units or realizing gains while markets are active. Once these objectives have been established, the next step is verifying your financial, clinical, and regulatory houses are in order. Making sure all these areas are up-to-date, organized and easy to present will simplify the entire M&A process and streamline any other activities associated with the buying or selling process (financing, licensure, operations, etc.).

Develop an M&A Communications Plan

Following M&A announcements, employees and clients naturally may experience anxiety and uncertainty about the organization’s future. This necessitates a joint communication strategy for department leaders to provide guidance and clarity. Establishing a communications team of key employees that will focus on managing announcements of the transaction, addressing employee apprehension, and ensuring a seamless integration process is a key part of keeping employees aware and comfortable in the process. These key employees will be instrumental in addressing concerns, fielding questions, and providing a reassuring and optimistic perspective on the company’s future direction.

Finally, it is paramount to bring in specialized expertise to support the buying or selling process. Accounting and legal support with experience in mergers and acquisitions is critical to making sure the interests of both the buyer and the seller are considered. It is also recommended to engage an M&A advisor to source potential deals, manage and assist in the valuation process, and guide operators through the complex process.

Continued Focus on Care

Most importantly, regardless of the corporate transitions occurring, a firm focus on quality care should remain the top priority. It is essential to develop a plan to integrate clinical systems and facilitate data sharing to maintain the quality and continuity of care.

It is essential to have a smooth transition process with minimal disruptions to your organization’s day-to-day operations, whether they involve clinical workflows, appointment scheduling, or individual access to services. Furthermore, continued monitoring of quality metrics such as client satisfaction and clinical outcomes remains just as crucial.

Prepare Your Organization for a Successful M&A Transaction

With well-planned and executed strategies, your organization will be able to realize the full potential of the M&A transaction. You will be able to proactively address any stakeholder concerns, mitigate risks, deliver clear communication to your team, and ensure a smooth and seamless transition.

When it comes to the intricate process of mergers and acquisitions, it certainly helps to have the expertise and guidance of M&A advisors in the health care industry. Stoneridge Partners has 25 years of experience managing complex transactions in the behavioral health industry. Contact Stoneridge Partners for a no-obligation, completely confidential consultation with one of our trusted advisors.

Dan Huckestein, is Vice President and Associate Partner. During his tenure at Stoneridge Partners, Dan has specialized in the brokerage of home health, I/DD, and hospice transactions. Peter Lynch, Associate Partner. Peter joined Stoneridge Partners after twenty years of experience as an operator in post-acute healthcare.