Voices: Ben Bogan, Partner, Stoneridge Partners

This article is sponsored by health care mergers and acquisitions (M&A) advisory firm Stoneridge Partners. In this Voices interview, Home Health Care News sits down with partner Ben Bogan and learns how the health care M&A market has shifted since the start of the COVID-19 pandemic, why some buyers have remained aggressive throughout the pandemic and why now is a good time to sell a home health care agency.

HHCN: In March, we interviewed your partner Joe Lynch in this series, just when COVID-19 was taking shape in the U.S. It was unclear at that point what impact the pandemic would have on health care M&A, but we have a clearer picture now. How has your outlook for buyers and sellers – and the insights you provide to them – changed these past four months?

Bogan: I don’t think the picture is much clearer now, because we’re still in the midst of dealing with COVID and so much is still up in the air and very fluid. The pandemic uncertainty made a number of buyers go on pause initially. I think they needed to stop, assess the situation and figure out what this was going to mean for them. 

Most buyers we deal with are strategic. They needed time to focus their attention on their own operations. A lot of them put their M&A efforts on pause to work their way through the COVID situation and see how things played out before they were ready to get moving again. 

Despite this, a smaller number of buyers decided to stay very aggressive during this time. They doubled down and committed to doing deals and because of that, we’ve seen a very active M&A space. It’s certainly been a smaller number of buyers, but they’ve accounted for significant activity.

Before this latest resurgence of COVID, I had many buyers who reached back out to say that they were ready to get moving again. They were ready to fill their pipelines and get deals going with the hopes of closing some transactions in 2020. Since those calls, we’ve seen a resurgence in the virus, so we’ll see if they’re rethinking their intentions at this point. Regardless, we still have a pool of buyers who are very aggressive.

For the aggressive buyers, is their aggressiveness combined with fewer buyers overall proving to be a winning strategy?

They’re getting deals done, but I think the real question is if those other buyers hadn’t paused their activity, would they have created a more competitive process? That’s an interesting question.

What I can tell you is that the aggressive buyers have full pipelines, are moving forward and getting deals done. Would they have fewer deals in their pipelines if the other buyers weren’t on pause? It’s hard to tell.

In light of what you’ve described, how are you advising sellers?

Keep in mind that not all sellers — and not all of our clients — look the same. They’re in different geographies, they’re in different service lines, they’re different sizes and they have different strengths. So, depending on their unique circumstances, the advice is always going to look different. 

But in general, if you have a strong business and you’re interested in engaging with a potential buyer, COVID may impact negotiations but it isn’t necessarily a deal-breaker. I’m glad to discuss a seller’s specific situation to understand whether now would be a good time to engage in conversations with potential buyers.

You’re an attorney by education and training. What are the specific benefits of the legal background with regards to M&A health care transaction work? 

A legal education provides a strong background of universal skills that help you operate in any industry including the M&A space, health care-related or not. It helps you develop strong writing and research skills to assist in understanding and managing complex issues. Regarding M&A work, my background helps me with negotiating terms and understanding legal documents. 

What are smart sellers doing right now? What should they watch out for?

Owners should be focusing on providing quality care and surrounding themselves with good staff and advisors. They should focus not only in the business but on the business. Good financials are also key. 

When it comes to a potential transaction, there are some things that are out of an owner’s control – geography, buyer interest at any particular time, etc. But if you’re running and building a strong business clinically and financially, with a strong team in place, there will always be interest from buyers.

And when the time comes, they should engage a good M&A advisor. The process is long, and an owner needs to continue to focus on their business without distraction. You’re looking at a six-to-12-month process, and you don’t want the business to falter during that time.

For potential sellers, is now a good time to sell?

The question should be, “Is now a bad time to sell?” There are certainly COVID-related issues impacting the M&A space, but as I said before, every situation is unique. Because of the aggressive buyers we discussed and the desire for buyers that were earlier on pause to get going again, we’re seeing a lot of deal activity. 

But is it a good time?

Every situation is unique, but with active buyers, a market ripe for consolidation, and some experience with dealing with COVID under everyone’s belts, now might actually be a great time to consider selling. It’s certainly not a bad time to engage with potential buyers, or with advisors who can help you make sure your business is ready for a future transaction.

Editor’s note: This interview has been edited for length and clarity.

Stoneridge Partners is a national health care mergers and acquisitions advisory firm specializing in the brokerage of home care, home health, hospice and behavioral health companies. For more information about their services, contact their corporate office at 800-218-3944 or via email at [email protected].

The Voices Series is a sponsored content program featuring leading executives discussing trends, topics and more shaping their industry in a question-and-answer format. For more information on Voices, please contact [email protected].

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