ORLANDO, Fla. — Company culture is a critical aspect of the business valuation process, according to a presenter who provided tips on how potential buyers develop appropriate valuations of O&P businesses at the O&P World Congress.
“At the end of the day if the two businesses are not stronger by joining together then it probably doesn’t make sense to proceed,” Mike Schlesinger, CPA, vice president, corporate business development with Hanger Inc., said here.
After reviewing a compilation of your financial documents, the buyer can make his valuation, which is key to determining the purchase price. A non-binding term sheet, or a letter of intent, is then signed by both parties, “but up until the actual closing when the funds transfer, either party can walk away from the transaction,” he said. “The timeline from when the term sheet is signed to the actual closing is generally 45 [days] to 60 days.”
The buyer will look at the risks and opportunities of acquiring your practice during the valuation process.
“They will look at the competition. Has competition recently entered the area or left the area? They will look at the demographics, at hospitals opening or closing. They are going to look at the strength of your clinical staff. They will look if revenues are increasing or decreasing,” Schlesinger said.
A buyer will look for a strong culture that focuses on compliance and incentive-based compensation where employees are rewarded for their contributions, as well as offers exceptional patient service. Any breakdown in compliance and risk, a disagreeable culture and changes in performance can sink the deal, he said.
For more information:
Schlesinger M. Selling your business-beyond the selling price. Presented at: O&P World Congress. Sept. 18-21, 2013. Orlando, Fla.
Disclosure: Schlesinger has no relevant financial disclosures.