It is impossible to know how much your company is worth without doing a formal valuation. Every company has unique characteristics that will make it more or less attractive to a specific buyer. Many healthcare service providers sell somewhere within a range of 3 to 5 times normalized EBITDA. This commonly used formula is a pretax earnings multiplier that assumes an asset purchase where the seller keeps the cash and accounts receivable and is responsible for any liabilities associated with the company. It also assumes that some gas will be left in the tank. In other words, a reasonable amount of working capital will be left in the business. Larger, more profitable companies can sell for a premium above this range while smaller, marginally profitable companies often sell below this range. Detailed financial and operational data is required to do a proper valuation.

Depending on the size of the transaction a sale from beginning to end can take anywhere from six months to well over a year. Why so long? Time is required to: 1) collect and analyze the data for the valuation, 2) qualify prospective buyers and execute confidentiality agreements 3) negotiate the letter of intent, 4) complete the due diligence, 5) negotiate the definitive purchase agreement, 6) assign/assume leases and contracts, and 6) transfer all applicable licenses. In a hot market the timetable can be accelerated to as little as 90 days, but in cooler economic times the pace can be glacial.

We understand the extremely sensitive nature of a business transfer and the importance of total confidentiality. Employees, patients, vendors, and the competition need not know your intentions until the transaction has been consummated and you’re cracking open the champagne. Trademark guards your proprietary information by executing confidentiality agreements with every prospective buyer, seller, or third party financing source.

Companies are typically bought on a multiple of pre-tax earnings. Personal expenses (example: country club dues, fancy cars, boats, etc.) and non-recurring expenses (example: fire, lawsuit, theft, etc.), are typically recast to produce an adjusted EBITDA or restated financial statement. However, and this is an important note, buyers will expect you to disclose, explain and defend each assumption. It is up to the buyers discretion whether he will accept your add-backs or not. Clean books are a sign of a clean company. Premium buyers want to see no more than five items on the recasting sheet; interest, taxes, depreciation, amortization and excess owners compensation. Buyers will pay more for companies with squeaky clean books, more still for companies with reviewed books and most of all for companies with audited books. Small companies typically can not afford audited books so keeping clean records is the next best defense.

You bet we do! You need only look as far as the Trademark website to see that we have existing relationships with active buyers of medical billing and transcription, medical supply, homecare, acute care, long term care, hospice care, diagnostic imaging, medical staffing and many other healthcare service providers. However, matching your company with the ideal buyer is much more like real life dating than the game Concentration (the matching game we played as kids). Because we specialize in the healthcare space, Trademark knows who's buying at a premium, who's selling for a discount and which deals qualify for financing. But like dating it takes time to find the perfect match. If we cannot produce the ideal candidates from our current cadre of buyers, we will conduct a dedicated search specific to your company to identify and qualify new prospects.

An acquisition is purchase of one corporation by another, through either the purchase of its shares, or the purchase of its assets. There's only one real way to achieve massive growth overnight, and that's by buying someone else's company. Acquisitions have become one of the most popular ways to grow a business. Since 1990, the annual number of mergers and acquisitions has doubled, meaning that this is the most popular era ever for growth by acquisitions.

A merger is the combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock.

Although mergers and acquisitions are often uttered in the same breath and used as though they were synonymous, the terms merger and acquisition mean slightly different things. When one company takes over another and clearly establishes itself as the new owner, the purchase is called an acquisition. From a legal point of view, the target company ceases to exist, the buyer swallows the business and the buyer's stock continues to be traded. In the pure sense of the term, a merger happens when two firms, often of about the same size, agree to go forward as a single new company rather than remain separately owned and operated. This kind of action is more precisely referred to as a "merger of equals." Both companies' stocks are surrendered and new company stock is issued in its place. For example, both Daimler-Benz and Chrysler ceased to exist when the two firms merged, and a new company, DaimlerChrysler, was created. In practice, however, actual mergers of equals don't happen very often. Usually, one company will buy another and, as part of the deal's terms, simply allow the acquired firm to proclaim that the action is a merger of equals, even if it's technically an acquisition. Being bought out often carries negative connotations, therefore, by describing the deal as a merger, deal makers and top managers try to make the takeover more palatable. A purchase deal will also be called a merger when both CEOs agree that joining together is in the best interest of both of their companies. But when the deal is unfriendly - that is, when the target company does not want to be purchased - it is always regarded as an acquisition. Whether a purchase is considered a merger or an acquisition really depends on whether the purchase is friendly or hostile and how it is announced. In other words, the real difference lies in how the purchase is communicated to and received by the target company's board of directors, employees and shareholders.

In a stock sale, the seller sells the actual corporation including all assets and liabilities, usually including cash, accounts receivable, bank debt, and all liabilities. In an asset purchase, the buyer only buys certain core assets of the company, usually leaving the seller with the cash, accounts receivable and all liabilities associated with the company. Whether a transaction is an asset purchase or a stock sale, who actually gets what assets and liabilities at closing is entirely negotiable. It is extremely important to consult with a qualified tax advisor and an experienced transactional attorney before entering into any binding agreements regardless of the structure.

A leveraged buyout (LBO) is a transaction whereby a company's stock or assets are purchased largely with borrowed money, resulting in a new capital structure consisting of a high percentage of debt secured by the assets of the acquired entity.

An earnout is a method of compensating a seller based on the future earnings of a company. It is the contingent portion of the purchase price. A common type of earnout provides for additional payments to a seller if the earnings exceed agreed-upon levels. Another type of earnout may provide that certain debt given to the seller as part of the acquisition price be paid out early if earnings exceed agreed-upon levels. There are many different types of earnout scenarios.

Due diligence is the verification of all representations made by the seller upon which an offer has been based. Due diligence is not initiated until after an offer has been accepted and a letter of intent has been executed. Sellers can expect buyers to exhaustively review all clinical, operational, and financial records. For some sellers this process could require a few representatives of the buyer to spend a week or so at the corporate headquarters of the seller. In other cases, the due diligence may be less invasive. The buyer should then immediately conduct a final analysis of all pertinent information and proceed to the negotiation of the definitive purchase agreement with the seller. If due diligence verifies the representations of the seller, the definitive purchase agreement should reflect the price and terms agreed upon in the letter of intent. The price and terms may be renegotiated up or down after due diligence if new concerns are discovered or if the process takes so long that the performance of the company warrants a change to the originally agreed upon price and terms.