Thank you to Kevin Taggart, Managing Partner of Mertz Taggart, for walking us through trends in the M&A landscape over the past year and offering predictions for the upcoming year.
One of the significant shifts discussed was the evolution of the buyer landscape over the last couple of years. The changing dynamics are that old buyers are either restructuring or fading away while new buyers enter the scene less frequently.
Determining the right time to exit is a critical consideration. However, Taggart emphasized solely trying to avoid trying to time the market due to its inherent unpredictability.
The typical timeline for an M&A process was outlined as 8-10 months, influenced not only by market conditions but also by personal factors such as burnout, retirement, etc. In this situation, Taggart recommended maintaining transparency immediately to avoid potential issues later.
Telehealth
Buyers are increasingly looking for specific elements when considering a purchase. Once a significant driver during the COVID-19 pandemic, Telehealth has shifted to being an additional service line rather than the main attraction.
Key Metrics
Buyer Turnoffs and Managing Risks
Staff leaving, cultural issues, and overreliance on platforms like Google were cited as potential red flags. The importance of managing risks transparently was stressed – from legal issues to payor audit callbacks. Buyers are willing to invest in comprehensive chart audits and legal counsel to ensure accurate billing.
Operational Margins and Legal Considerations
Operational margins, ranging from 15% to 30%, were discussed in detail, with financial buyers compared to strategic buyers. Various legal considerations were raised, particularly in the substance abuse sector. Taggart emphasized that while legal issues can be significant, they may not play as decisive a role in decision-making, though situational factors can still come into play.
Diversifying marketing strategies beyond reliance on Google was advised, emphasizing referrals, alumni engagement, business development, and digital channels. The discussion also touched on hot markets for mergers and acquisitions, emphasizing having a succession plan in place from day one.
As the industry continues to evolve, businesses must adapt to these trends to thrive in an ever-changing market.
And with that, we hope you have a great holiday season and we will see you for our next discussion on Tuesday, January 9th on:
