At the Becker's ASC 21st Annual Meeting in Chicago on Oct. 23, five experts from the ambulatory surgery center industry discussed the outlook for investment, mergers and acquisitions in the ASC sector.
Panelists included Matthew Searles, managing director of Merritt Healthcare, Tim Baker, president of Principle Valuation, Michael Weaver, managing director of Tenet Healthcare, Danny Bundren, vice president of acquisitions and development at Symbion Healthcare, and Michael Stroup, senior vice president of acquisitions at United Surgical Partners International. The session was moderated by Bart Walker, JD, partner with McGuireWoods.
"There seems to be an upward trend in valuation," noted Mr. Walker. The panelists provided the following insight on selling an ASC in a maturing industry.
1. Inspect the ASC thoroughly before the sale. Improve it, prepare it and position it to sell. Make sure the ASC has a solid platform for growth with a steady volume and good payer mix.
2. Perform due diligence and valuation. They are vital to the decision-making process, and it will be difficult to close a transaction without them.
3. Focus on purchase price and return on investment first, then look at the multiple.
4. Examine the market to understand the multiple. "Physicians tend to have unrealistic expectations," said Mr. Bundren. "They see a seven or eight and don't realize what seven or eight means."
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