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Romance And The Sale Of Your Ambulatory Center

Regardless of desired end, however, in order to obtain the best price in a sell-side ASC transaction, it is imperative to reach out to and consider a wide range of potential suitors “ and to do so in a systematic fashion early on in the process. If you do not have at least a few concrete and articulable buyers for your surgery center, you have no leverage. And without leverage, the experienced negotiators on the buyer's professional development staff will surely take advantage.

Negotiation researchers Roger Fisher and William Ury of the Harvard Program on Negotiation (PON) have conducted in-depth analysis of what they call the "Best Alternative to a Negotiated Agreement" or BATNA. Experienced negotiators will see the BATNA not as a safety net, but as a point of leverage in negotiations for the sale of your ambulatory surgery center or radiation oncology center. By carefully and systematically conveying the BATNA to prospective purchasers of your ASC at the critical juncture in the negotiation process, your SEC registered business broker will put you in the best position to meet your unique goals, whether your ideal suitor is raring to go, blessed with deep pockets “ or both.

The ideal sell-side process is comprised of a two-stage solicitation process. It begins with an experienced and caring FINRA licensed investment banker who will take the time and do the work required to fully understand the seller's needs and wants for the sell-side transaction. As the seller, your goals should guide and underpin the framework for the entire undertaking. After all, individual owners of ambulatory surgery centers and radiation oncology centers often have a wide range of reasons for selling and just as wide a range of desired outcomes. For example, sometimes an owner may want an immediate, outright sale of the business for cash. Then some are facing bankruptcy and need equity investors that can come in and manage and turn the center around. Other times, a recapitalization or a joint venture with a corporate partner or hospital is the desired end. Many time radiation therapy center owners want to syndicate and sell some shares of their business. Some owners want to leave the business as soon as the sale is consummated, while others would like a chance to "keep a hand in" for a specified period of time in a specified role. Some sellers are absolutely clear on their objectives for a sale, while others require more time and information before they are sure of their desired end. Your Securities and Exchange Commission registered business broker should understand “ and help you understand -- the ramifications of various alternative deal structures so that you can choose the best structure “ and the best buyer “ to realize your goals for the sale.

After you have identified your ideal outcome for the sale of your ambulatory surgery center or radiation oncology center, your SEC registered investment banker should then help you prepare a Confidential Seller Profile and Confidentiality Agreement. The Confidential Seller Profile briefly highlights those attributes of your company that are most likely to appeal to potential purchasers, such as corporate assets, achievements, and growth potential. The Confidential Seller Profile is intended to be an anonymous description of the ambulatory surgery center in play (in this case, yours). Once these two documents are reviewed and approved, they will be among the first documents that are provided to prospective buyers.

Your registered investment banker will then work with you and your finance people to begin gathering the information needed to develop the Seller Memorandum. The Seller Memorandum is the central marketing piece for the sale of your ambulatory surgery center or radiation therapy center; it provides a much more comprehensive view of your company than does the Confidential Seller Profile. In fact, the Seller Memorandum closely resembles an annual report in terms of depth, although naturally it is written from more of a marketing angle. The Seller Memorandum highlights your ASC's financials, operations, management, strategy and market competition. It also places your company in an appropriate context, with a thorough discussion of relevant micro- and macroeconomic forces facing the industry. Ideally, the Seller Memorandum should include a fiscal model: a rendering of historical and projected financials overlaid with data concerning the industry-specific and broader economic drivers that have affected your ambulatory surgery center or radiation oncology center in the past and that may impact it going forward.

An experienced and licensed investment banking professional will be able to identify and highlight the specific attributes of ambulatory surgery centers and radiation oncology centers that prospective buyers value most highly. Your Seller Memorandum should be written to identify and highlight those attributes, as well as to call attention to benefits and advantages that a prospective purchaser may not previously have considered.

Once the Seller Memorandum is complete “ or even while it is being developed -- the next step in the sell-side process is to identify prospective and the most qualified buyers for your ambulatory surgery center or radiation oncology center. In order to consummate the sale efficiently, smoothly, and for the best possible price, the emphasis should most assuredly be placed on the word qualified. Your investment banker will conduct exhaustive research to pinpoint appropriate would-be purchasers and investors. Registered investment bankers will have access to public databases of information “ and, if he or she is a seasoned professional with broad experience in the ambulatory care industry, will probably have a sizeable proprietary data warehouse, as well. Companies interested in purchasing or investing in an ambulatory surgery center may surprise you; depending on the circumstances, prospective purchasers may include not only companies that own and manage centers similar to yours, but also local or regional health systems, your closest competitors, physicians, tunnel buyers (such as a diagnostic group seeking to purchase a radiation oncology center), and financial firms (e.g., private equity groups).

Throughout this delicate period in the sell-side process, your investment banker should exercise the utmost discretion and “ where appropriate “ take pains to conceal your identity from certain prospective buyers. For example, a particular seller may wish to keep news of a potential sale away from certain competitor companies “ or to reveal such information to competitors only very late in the sales process. A seasoned, FINRA licensed and SEC registered investment banker will appreciate these and other aspects of the "nuance of the deal," and will work with you and your other advisors to ensure that each contact with a prospective buyer is appropriate in terms of both timing and content. As with romance, timing and substance each play a critical role in ensuring a match made in heaven “ to say nothing of happily ever after.

Blayne Rush is the President of Ambulatory Alliances, LLC (www.AmbulatoryAlliances.com) and is a SEC registered and FINRA licensed Investment Banker. He specializes in acquisitions, alliances and access to capital markets for surgery and radiation oncology centers. He holds a masters degree in Health Promotions and a MBA. He has over 15 years of experience in the health care industry and has worked with over 250 different healthcare organizations. Ambulatory Alliances uses a two stage negotiated bid process to help obtain the premium price for your center. He can be reach though their web site or by calling 469-385-7792.