We have been hearing about a “bid-ask spread” issue in the lower middle market healthcare space for a significant time, and I wanted to discuss this and also mention another pocket of dislocation that I see.
In the course of an acquisition, “due diligence” is often regarded as a built-in part of the process – a formality to be checked off once it’s completed. However, acquisitions that conduct thorough and competent due diligence have a greater chance of success because decision-makers have the quality of information they need to make a decision.
For many owners of independent construction firms, selling their business is more than an exit strategy; it is the cornerstone of their retirement plan.
Events during the past few years have changed merger and acquisition deal volumes, a trend we expect to continue, including large numbers of transactions driven by the amount of debt and equity capital available. We see this in all deal sizes and across all industries.
In Mergers & Acquisitions (M&A), the landscape changes, sometimes rapidly. The reasons can be that the market is “hot” or “cold,” depending upon the level of interest, or valuation multiples demonstrated by buyers.
Buying or selling a dental practice is a major decision with lasting impacts. Dentists rarely turn over the keys and walk away from operations – the process is much more of a transition
rather than a transaction.
Entrepreneurs and business owners spend years building their business — and often years before that dreaming of and planning for it. Every owner knows the journey it took, from the highs of launching the business or securing the first customer to the lows of meeting an early payroll liability or facing the uncertainties of the recent pandemic.
“That won’t ever happen.” That is what I told my father-in-law, Ralph, every time he wanted to discuss what I should do if he were to pass away before his father did.
Most construction business owners will spend a lifetime making sure their businesses succeed. After all of your hard work, do you really want to leave the fate of your business in someone else’s hands? As it is likely your largest asset, you’ll want to ensure your business is protected through a detailed estate plan. This plan should focus on minimizing estate and gift taxes as well as protecting your wealth for your family.
Statistics indicate baby boomers account for more than 50% of the construction industry. That means half of owners, along with their skills and knowledge, are headed towards retirement. Even more alarming is only half of those owners have a succession plan. If your company faces a disruption or change in ownership it reduces its chance of survival to only a small percentage. Even owners who don’t have an immediate retirement on the horizon need to have a plan.
You’ve done it. You’ve built a booming construction company and now you’re ready to relax. As a business owner, it’s important to plan your exit from the company years in advance to ensure you can depart with confidence. How will your exit impact you and your family?
Less than a year. That’s how long it took a successful construction company to permanently close after the owner unexpectedly passed away. Before his death, the company was thriving. But without a business continuity plan in place, the business didn’t survive a year.
Neal Stephens is a transaction advisory director for HORNE Capital Strategies at HORNE LLP. He works with business owners, strategic corporate buyers, and private equity investors to advise and manage the sale and purchase process for transacting parties.
Jarrod Barraza serves as a senior manager in the healthcare valuation service line at HORNE where his practice focuses on business valuation and transaction consulting services in the healthcare industry. Jarrod joined the firm in 2019. Prior to joining HORNE, Jarrod served as a manager in a national healthcare valuation and consulting firm and as an intern at a boutique business valuation and litigation support firm.
Josh Edwards is a public and middle market managing partner for HORNE and a member of HORNE’s Board of Directors.
Part of the life cycle of a business is a change in ownership, when an owner or founder sells his or her business.
Over the past year, business owners have been confronted with key decision points related to uncertainty about the COVID-19 pandemic and how to be competitive in the new economic environment. Prices are increasing, consumer spending is up, and customer behaviors have shifted more dramatically in the past year than in recent history.