The Importance of Seller Patience in Healthcare M&A

The Importance of Seller Patience in Healthcare M&A by Dr. Allen Nazeri DDS MBA

When business owners decide to sell their companies, they often expect the process to move swiftly. However, the reality of Healthcare M&A is that it typically unfolds at a glacial pace. While some deals can close quickly, the average transaction takes four to six months, and larger, more complex deals can take even longer. Understanding and embracing this timeline is crucial for sellers to navigate the process effectively and achieve the best possible outcome.

Why Does Healthcare M&A Take Time?

Several factors contribute to the extended timelines in Healthcare M&A transactions. Sellers must recognize these realities and exercise patience as the process unfolds.

1. Institutional Buyers and Investment Committees in Healthcare M&A

Institutional buyers, such as private equity firms and strategic acquirers, often take longer to reach the Letter of Intent (LOI) stage. These buyers operate within structured investment committees that evaluate multiple deals simultaneously. Each deal must go through internal vetting, due diligence, and approval stages before progressing. This inherent bureaucracy means that even highly interested buyers may take weeks or months before committing to an LOI.

2. Cyclical Nature of Investment Activity in Healthcare M&A

The Healthcare M&A market is constantly evolving, with new buyers entering the space and existing buyers adjusting their strategies based on economic conditions. Sellers should recognize that investments, like many aspects of life, follow cyclical trends. Market fluctuations, interest rates, and investor sentiment all play a role in determining deal timelines. An impatient seller who exits too quickly may miss out on more favorable conditions just a few months down the line.

3. The Role of Auditors and Legal Teams in Healthcare M&A

Once a deal reaches due diligence, the buyer relies on third parties such as quality of earnings (QoE) auditors, legal teams, and financial advisors. These professionals have their own schedules, workloads, and obligations, which can introduce additional delays. A buyer may be ready to proceed, but if an auditor or legal team has a backlog, the process can slow considerably.

The PRIME Exits and American Healthcare Capital Approach to Healthcare M&A

At PRIME Exits and American Healthcare Capital, we emphasize the importance of patience and strategic timing. Unlike firms that facilitate rushed, undervalued sales, we focus on maximizing value for our clients. The process takes time, but this deliberate approach ensures that sellers achieve optimal outcomes.

Preparing Sellers for a Profitable Exit in Healthcare M&A

One of the best ways to mitigate frustration during a Healthcare M&A transaction is to start planning early. We encourage business owners to engage with us well in advance of their intended sale timeline. This preparation allows us to:

• Conduct preliminary financial assessments

• Address potential red flags that could slow the process

• Identify and engage with the right buyer pool

• Strategically position the company to maximize value

When sellers come to us early, we can guide them through the entire Healthcare M&A journey, ensuring they understand the timeline and manage expectations accordingly. The goal is to prepare them not just for the sale but for a profitable and strategic exit that aligns with their long-term goals.

Patience Pays Off in Healthcare M&A

While the waiting game can be frustrating, patience in Healthcare M&A transactions is often rewarded. Sellers who allow the process to unfold at its natural pace are more likely to attract serious buyers, secure favorable deal terms, and ultimately achieve a higher valuation. Those who rush into a sale may leave significant value on the table or, worse, encounter unnecessary hurdles due to inadequate preparation.

By understanding the factors that impact deal timelines and partnering with experienced advisors, sellers can position themselves for a successful exit. At PRIME Exits and American Healthcare Capital, we remain committed to guiding our clients through the complexities of Healthcare M&A with a focus on value maximization and strategic patience.

If you're considering selling your company, reach out to us early. We’ll help you prepare for a seamless and profitable transition, ensuring that patience truly pays off in the long run.

Dr. Allen Nazeri, aka "Dr. Allen," boasts over 30 years of global experience as a healthcare entrepreneur. He is the Managing Director at American Healthcare Capital and Managing Partner at PRIME exits. Dr. Allen provides strategic growth consulting to leadership teams of both privately held and publicly listed companies, ensuring their preparedness for successful exits.

He holds a Dental Degree from Creighton University and an MBA in M&A and Investment Banking from the University of Bedfordshire. He is a Certified M&A Professional (CM&AP) from Keenesaw State University. Dr. Allen is the author of the brand new book "Selling Your Healthcare Company at a Premium". Dr. Allen offers a free valuation to business owners ready for a partial or complete exit strategy. Dr. Allen collaborates with strategic buyers, private equity firms, and institutional investors, taking direct accountability for the annual successful sell-side representation of nearly $750M in enterprise value.

To have a confidential discussion about your company and receive a free valuation, please email Allen@ahcteam.com or Allen@ahcpexits.com or fill out the valuation form https://www.pexits.com/freecompanyvaluation

You can also now communicate with Dr. Allen's clone https://www.delphi.ai/drallen

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