Selling and Buying Healthcare Companies

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Healthcare related businesses in the South Florida market are always in demand. Our area’s high medicare and senior citizen population, along with the constant influx of baby boomers, make healthcare companies in South Florida a hot commodity among many investors and entrepreneurs. Home-healthcare companies, physical therapy centers, nurse registries, and Durable Medical Equipment (DME) firms are some of these sought after healthcare related companies. Five Star Business Brokers of Palm Beach County ensures that all parties to a healthcare related transaction understands critical issues such as the licensure transfer, non-compete agreements with staff, and understanding how the business markets and procures its patients.

Many healthcare related companies require AHCA (Agency for Health Care Administration) approval to transfer the license from the seller to the buyer. Home-health care companies or nurse registries for example require a Change of Ownership Application (CHOW) to complete the transfer. Transferring a healthcare license can be a lengthy process taking up to several months. Questions arise such as who is in charge of the business during this delay, whether money needs to be held in escrow pending the transfer, and whether the buyer can properly comply with the document request from AHCA and be eligible to assume ownership. Some sellers will not have the patience to deal with ill-informed buyers who may delay the process or jeopardize the transfer…so buyers beware! It is also relatively common for the parties to conduct a stock purchase deal (rather than an asset purchase deal) to avoid delay and bureaucratic headaches altogether.

Part of a buyer’s request when purchasing a healthcare related business may be that the company’s staff sign non-compete agreements so they do not compete with the business.  Martin at Five Star Business Brokers of Palm Beach County has seen many situations where a home health company has key personnel such as nursing supervisors or executives. Buyers are often afraid that without the proper protections, these employees may simply take the company’s clients or referral sources and start a new company. Such issues must be delicately negotiated and handled with care before it becomes a problem. Buyers must understand that it is not standard in the industry for such individuals (particularly if they are actual caregivers) to sign non-compete agreements.

When a healthcare company such as a physical therapy center gets all their referrals from the seller-owner’s fishing buddies, buyers will justifiably wonder what will happen when the seller is no longer there! When the seller-owner himself or herself is the main way that the business procures patients, then an arrangement has to be made to give the buyer peace of mind that the business will continue to procure those patients. Sometimes the seller may agree to stay on for a year or more so that the buyer can ‘take over’ those referral sources. Sometimes the price of the business must simply reflect this fact, and the best and only buyer for the business is another healthcare provider (such as a physical therapist) with their own referral sources. Sellers must be made aware that a buyer will want some assurances that the patients stay with the business.

Give Martin at Five Star Business Brokers of Palm Beach County a call today with questions about evaluating your healthcare related business.

Located in Palm Beach County, Florida, Five Star Business Brokers proudly transacts business sales throughout the areas of West Palm Beach, Lake Worth, Palm Beach Gardens, Boca Raton, Jupiter, Delray Beach, Boynton Beach, Wellington, Palm Beach, Royal Palm Beach, and Riviera Beach.

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