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Ready to sell?

May 12, 2014
by Shannon Brys, Associate Editor
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While the business is about treating individuals’ mental health and substance abuse disorders and helping them to lead fulfilling lives, the business is still a business. With ownership comes tough decisions, such as, “When should I sell my behavioral health company?”

Kevin Taggart and Cory Mertz, co-founders and managing partners at Mertz Taggart (Johns Creek, Ga.), a healthcare merger and acquisition firm with an emphasis on behavioral healthcare, believe that this is a very personal decision. The ideal situation is for these two worlds to collide when:

1.      It’s the right time for the owner to sell and move on to the next stage his or her life: retirement, another career move, etc.

2.      The business is growing and thriving.

“Investment dollars are starting to pour into the industry with the expectation of growth,” says Mertz, who presented a recent webinar with Taggart on this topic. Because barriers to access for treatment are slowly coming down, the industry is growing.

In contemplating or preparing to sell your behavioral health business, there are a number of underlying issues that Mertz and Taggart commonly see in these transactions. For example:

  • Trust is the number one deal breaker, according to Mertz. Since most of the purchase price is intangible – all about good will, the individuals who work at the organization, the way the business is run – the buyer needs to trust the seller as well.
  • Balance of power: Throughout the process, the balance of power will shift between the buyer and seller. It’s important to know when those shifts will occur.
  • Confidentiality: It’s crucial to “keep the circle small.” Patients, staff, and community members shouldn’t be aware of negotiations.

In the following parts of this article, Taggart explains the steps that are involved in the mergers and acquisitions process, from preparing to the sale to post-closing.

[Read Part 2]