In an era of unprecedented change in the healthcare sector, mergers and acquisitions (M&A) have become an increasingly popular strategy for growth, consolidation, and improved services. However, for many private practice physicians, the intricacies of the M&A process can be daunting. Thankfully, experts like Michael Roub, the Managing Partner of Inflection 360, are dedicated to simplifying this complex process for physicians and other small businesses alike.
Recently, Michael had the opportunity to join George Grombacher on the LifeBlood podcast where he shared his invaluable insights on the M&A process in healthcare. This article builds on the snippets of that enlightening conversation, aimed to demystify the M&A process for private practice physicians and provide actionable insights to leverage these deals for the advancement of their practice.
The Evolving Landscape of Healthcare
Healthcare is an industry that changes constantly, with every new regulation, technological advancement, and shifts in market dynamics. This fluidity makes the sector ripe for M&A activity. According to Michael, healthcare is a “stroke of a pen industry” that is characterized by a lot of twists and turns. Regardless of these changes, the industry’s need for growth, innovation, and value creation remains constant.
In this evolving landscape, private equity has emerged as a significant player. Michael discussed how private equity has driven consolidation across various specialties, leading to the rise of large healthcare systems and a corresponding decrease in the number of independent doctors. The power of private equity lies in its ability to create efficiencies and scale, offering opportunities for healthcare providers to expand their footprint, improve service delivery, and compete more effectively.
The M&A Process: An Opportunity, Not a Threat
Private practice physicians often view M&A activity with apprehension, seeing it as a threat to their independence and control over their practice. However, Michael suggests a shift in perspective – viewing M&A as an opportunity rather than a threat. He emphasized that “more transactions than not fall through,” highlighting the importance of a strategic approach.
Michael encourages physicians to leverage expert advice in navigating the M&A process. He explained how physicians often leave money on the table or fail to prepare adequately for transactions due to a lack of guidance. By seeking expert advice, physicians can ensure that they’re not overreaching or giving up too much because they were unprepared.
Harnessing the Power of M&A: A Strategic Approach
When engaging in M&A, Michael suggests physicians focus on what brought them to their current position – their medical expertise and commitment to patient care. Let the M&A experts handle the transaction, allowing physicians to concentrate on running their business. A decline in performance during a merger or acquisition can negatively impact the value of the business, leading to unfavorable deal outcomes.
Furthermore, Michael advises against striving for perfection in every aspect of the M&A process. Borrowing a quote from Mark Cuban, he shared, “Perfection is the enemy of success.” In the dynamic world of M&A, adaptability is key. Rather than waiting for every detail to be perfect before moving forward, it is more beneficial to keep moving, adapting, and adjusting as necessary.
The M&A process, while complex, presents a wealth of opportunities for private practice physicians. With the right guidance and strategic approach, physicians can navigate the process effectively, ensuring their practice’s growth and success in the evolving healthcare landscape.
To learn more about how Inflection 360 can assist with your M&A journey, please visit our website or connect with Michael Roub directly on LinkedIn. Our team of experts is dedicated to providing strategic consulting, advising, and hands-on execution to help your business outcompete, grow, and exit at significant valuations.
Healthcare M&A is more than a financial transaction – it’s a transformative process that can position your practice for long-term success. By demystifying the M&A process, we hope to empower private practice physicians to leverage these opportunities for the advancement of their practices.