Thinking of selling your agency?

Here are 7 steps to get ready - and a few mistakes to avoid - when preparing to sell a home health or hospice agency

Editor’s note: Today’s post is the third in our month-long series on information presented during the recent Leadership Summit 2020 sponsored by Simione Healthcare Consultants.

When you’re thinking about selling your home health or hospice agency, a bit of extra diligence before you put up the “for sale” sign may attract additional buyers and fetch a better price, according to a Simione Healthcare Consultants Principal with more than 20 years of experience in financial transactions.

“Buyers appreciate seeing that you have everything in order,” David Berman, who leads mergers and acquisitions for Simione, told virtual attendees during Simione’s recent Leadership Summit 2020.

In much the same way you might boost your home’s curb appeal with a garage cleaning and a fresh coat of paint prior to listing it, taking the time to tidy up an agency’s records, shore up compliance and make certain key positions are filled will increase the agency’s desirability in the eyes of buyers, Berman said.

Berman moderated a panel discussion during the virtual Summit in which Robison+Cole Law Firm Partner Leslie (Les) Levinson and Simione Growth Director Melynda Lee offered expert insight on preparing to sell an agency.

Here are a few of their tips:

1. Start preparations well in advance. The most successful sales generally take months -- perhaps even as long as a year -- of preparation. Record-keeping will need to be reviewed and corrective measures may need to be implemented. Market studies will need to be conducted and key positions may need to be filled. All of that will take some time.

2. Get expert advice. Assemble a strong support team of legal advisors and accountants to guide you through the process and make certain agency records are ready for buyer perusal.

“You’ll need good advice on this,” Lee said. “Don’t make the mistake of trying to do this alone. There are simply too many moving parts.”

3. Consider hiring an outside firm with extensive transaction experience to do the due diligence, market analysis and guide your agency through the full process.

One of the biggest mistakes Berman sees owners make is believing a trusted local attorney or accountant will be sufficient for the sale – especially when the agency is small and the transaction price is expected to be small as well.

A company like Simione, with a staff of certified and experienced personnel familiar with home health and hospice transactions, will be able to make recommendations a skilled local attorney may overlook, Berman said. Simione can perform a critical analysis, evaluate market possibilities, identify risks and shore up weaknesses in clinical, operational and financial areas to increase the agency’s overall value prior to the sale.

4. Don’t box yourself in with pre-conceived ideas. A company knowledgeable and experienced in mergers and acquisitions can pull back the curtain on all possibilities – including some owners may not have previously considered as options.

“Would an asset sale be preferable, or would a joint venture be better? An experienced professional will understand the market and walk you through the advantages of each, helping you determine which would be the most beneficial in your situation,” Levinson said.

5. Get to know your market and anticipate the competition’s reaction. A detailed market analysis can reveal opportunities which will entice buyers and better position your agency for a more profitable transaction. Having this information available to buyers inspires greater confidence in your organization.

6. Use data to develop your approach to the sale. Buyers want to make data-based decisions, and you can successfully woo the right one with a sound, data-based market strategy.

“We have better data available now than we’ve ever had in this industry, but we don’t always use it,” Lee said. “Simione works with agencies to teach them how to analyze and use the data going forward.”

7. Finally, manage your expectations -- both operational and financial. It’s generally impossible for both buyer and seller to walk away from the transaction fully satisfied, having obtained everything they each wanted, according to Levinson. But a successful give-and-take transaction will leave both sides feeling confident that the final arrangement was the best one: fair, profitable and beneficial to both parties.

Need our help?

Simione Healthcare Consultants can help your agency consider its options, collect and analyze market data, evaluate market opportunity, shore up revenue management, develop a strategic plan for the future and improve compliance. Give us a call at 1-844-215-8823 to get started. Want to learn more? Sign up for a complimentary webinar sponsored by Simione Healthcare Consultants on Nov. 10. The 60-minute webinar, titled "Agency for Sale? Spruce Up Clinical & Financial Operations for Maximum Returns," will focus on key steps to prepare for sale and find the buyer of your dreams. The free webinar will take place from 3 until 4 p.m. Presenters will be David Berman, CPA, CGMA, CVA, Principal, and Rachel Witt, RN, BSN, BCHH-C, COS-C, Director, M&A Integrations, Simione Healthcare Consultants. Click here to register. See our other blog posts on this topic:

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