In our last two blog posts, we talked about having “the End in Mind," more specifically being financially-oriented as related to an exit strategy, delved into personal objectives - contrasting topics of lifestyle and income versus effort and wealth, and finally looked at the operational considerations around the structures of the business itself.

We saved arguably the best for last…

We spend a lot of time on the road each year and have the good fortune to be able to speak in front of many diverse audiences, so it’s really nice to have an opportunity “to be a student” from time to time.  One of those times is our annual trip to “Chiberia” in February for the McGuireWoods HealthCare Private Equity Conference. 

Hopefully you found Part One of this blog valuable.  In the event that you missed it, you can access it HERE.  Let’s get going on part two, which will focus on Concerns around Valuation. 

We spend a lot of time on the road each year and have the good fortune to be able to speak in front of many diverse audiences, so it’s really nice to have an opportunity “to be a student” from time to time.  One of those times is our annual trip to “Chiberia” in February for the McGuireWoods HealthCare Private Equity Conference. 

We always learn a ton at this conference and 2019 was no exception – so much that we’re having to break it into two separate blogs.  Let’s dig in on the first one that will shed some light on the Economic Outlook for 2019 as well as Considerations for Building an Exit Strategy…

In our last two blog posts, we talked about having “the End in Mind," more specifically being financially-oriented as related to an exit strategy, and then delved into personal objectives - contrasting topics of lifestyle and income versus effort and wealth. 

If those two blogs gave you some clarity around financial outcomes, time frames, and effort, then hopefully this one will be equally beneficial in the areas of “the WHAT” and “the WHY.”

In our last blog post, we talked about “the End in Mind” being more financially-oriented as it related to exit strategy and deal structure, specifically around the aspects of: transaction value and actual structure of the sale; requirements post-sale; and strategy necessary to achieve the intended outcome. 

Over the course of 2018, we were fortunate to host over 50 different businesses in our office. Some of these were private equity groups and search funds; others were established, founder-led group practices; and some were solo doctors with only one or two locations under their belt.  That’s quite a variety, but they all shared two things in common…

We work with clients all over the U.S. and inevitably hear comments like: “My five-location group generates about $12,000,000 in revenue.  I’d like to build it up over the next five years and sell it for $50,000,000.” 

OK…if you say so. 

Do you want to borrow $49,000,000 to make that happen?  I kinda doubt it.

What do you care more about: the amount of the sale or the amount you put in your bank account?  If your answer is the latter, then you need to pay more attention to the amount of debt you take on and the impact that the tax rate will play because both of those will be paid off before the sale proceeds are deposited into your account.

Wisdom & Wandering from the Herd

Last fall, my partners and I all attended the McGuireWoods Healthcare Private Equity Conference here in Charlotte.  While most of the southeast was still battling the remnants of what was Hurricane Irma, we had an opportunity to listen to sector experts as they tried to navigate the swirling winds of the healthcare industry.  Make no mistake – healthcare is hot.  There is a lot of opportunity, but it doesn’t come without an equal amount of risk.

Here’s what we learned…

The dental industry has recently experienced a tidal wave of emerging group practices.  These emerging groups are creating waves for a number of reasons, but one of the most notable is the staggering dollar amounts buyers are seemingly willing to pay for them.

Have you ever wondered if all it was actually true?  Did your buddy who sold his group really walk away with $50,000,000?! 

Or are there other details behind the dollars?  There are – and we’re going to unpack those details right now.