Steven - Healthcare M&A Guy

Partner and Founder @ OakBridge Advisory. Financial due diligence pro (QoE) specializing in all things healthcare. Ex-B4 and IB with 15+ years of experience.

[Steven - Healthcare M&A Guy @HCareAdvisorGuy]

Over the past few weeks, I've walked through, in detail, key steps in the financial due diligence process. Below is where you can find each. I'll pin this post on my profile so you can go back and find it easily.

Headline purchase price (HPP) vs. Cash Paid
https://t.co/L8CjUAQMfc

Quality of earnings
https://t.co/q3uMSCe6Ek

Proof of cash
https://t.co/qnxTJg1bV0

Why EBITDA?
https://t.co/fXtJaInnox

Finding adjustments to EBITDA
https://t.co/EpyXlrXZIW

Net Working Capital Guide
https://t.co/tEytWLnXbX

Debt and debt-like items
https://t.co/E0XFjYVyeC

Purchase agreement support
https://t.co/WhaW7ZIcdX

One of these days, @CoFoundersNik and I will create the foremost ETA guide with templates to take you through the whole sourcing, valuing, diligence, and closing process but until then... accept this as my humble offering.

[Steven - Healthcare M&A Guy @HCareAdvisorGuy]

Purchase Agreement Support

As part of financial due diligence, your advisor should be providing you and your attorneys assistance with the purchase agreement. How do we do this:

1. We will review and provide accounting definitions in the purchase agreement, especially those related to working capital, debt, cash, etc.

2. We will review and provide opinions on the accounting principles that will govern working capital, debt, and cash at closing. For example, if GAAP is used as the governing principles and the company has known deviations from GAAP, we can assist revising the language to explain such deviations.

3. We review the purchase price section to provide comments and recommendations around closing mechanics.

4. We will review the financial and accounting seller representations and provide a view if there may be any potential issues with the seller adhering to those reps.

5. Assist with the preparation of exhibits for the purchase agreement, including a sample net working capital calculation.

[Steven - Healthcare M&A Guy @HCareAdvisorGuy]

@tabishjesrai you're the only reason i'd come back.

[Steven - Healthcare M&A Guy @HCareAdvisorGuy]

A lot of folks calling BS on this one. This was 2018 and, yes, deals at the multiple were very real.

I came out of X retirement to type this and now, like Michael Buble after Christmas time, I will go back to the recesses of my cave and provide best-in-class healthcare financial due diligence to my amazing clients.

Thanks @mhp_guy for blowing up my emails, LinkedIn and X accounts.

[Chris Koerner @mhp_guy]

Your regular reminder that a small handful of autism clinics sold for $64m - a 32x run rate multiple.

$2m profit
64 patients
$64m exit
23 months from founding to exit

New locations broke even in 1.5 months

These autism clinics and deals aren't nearly as controversial as you'd think:

- Insurance usually pays for it
- Parents are largely happy
- Business owner and employees do well

ABA Therapy is life changing for these kids.

My good friend is an M&A advisor that worked this deal

[Steven - Healthcare M&A Guy @HCareAdvisorGuy]

@mhp_guy don't you welcome me back - you did this to me.

[Steven - Healthcare M&A Guy @HCareAdvisorGuy]

@tabishjesrai @mhp_guy I still love the business.

[Steven - Healthcare M&A Guy @HCareAdvisorGuy]

“The go-to QofE firm on the HBS search fund What’s App group chat”

This feedback of how someone found us had me rolling.

If you'd like us to be the go-to QofE firm for your (Insert B-school name here) search fund What's App group chat - feel free to drop us a line.

[Steven - Healthcare M&A Guy @HCareAdvisorGuy]

There wasn't an option for Payor Margins.

[Mark Cuban @mcuban]

What is the biggest issue with Healthcare Insurance

[Steven - Healthcare M&A Guy @HCareAdvisorGuy]

@ClintFiore @mhp_guy this is the tweet that i needed to see in response to this.

[Steven - Healthcare M&A Guy @HCareAdvisorGuy]

@CLouvi debt compliance? shoot me a note - depending on industry, may have a solution for you.

[Steven - Healthcare M&A Guy @HCareAdvisorGuy]

@stephenolmon you guys should just pool your resources, buy a building, pay some instructors, and install a playground in the back.

[Steven - Healthcare M&A Guy @HCareAdvisorGuy]

@mhp_guy Cool. Thx.

[Steven - Healthcare M&A Guy @HCareAdvisorGuy]

@theDSOguy @pinpulleddrmf @SullyBusiness just keep going heavier. its the only way.

J/k i max out at 1/3 of my body weight and have a belt support to rotate the pressure off my back vs. my hips (similar to backpacking).

[Steven - Healthcare M&A Guy @HCareAdvisorGuy]

@mhp_guy he's going to be just fine in that school district.

[Steven - Healthcare M&A Guy @HCareAdvisorGuy]

@tabishjesrai @ApexJones22 this is that LA bias showing through. We all have blind spots. My real top 10 is Stockton, Malone, Greg Ostertag and then fill in the rest.

[Steven - Healthcare M&A Guy @HCareAdvisorGuy]

@tabishjesrai @ApexJones22 these are some hot takes Tab. The real list is:

1. Jordan
2. Bron
3. Kareem
4. Magic
5. Bird
6. Russell
7. Duncan
8. Kobe
9. Shaq
10. Curry

[Steven - Healthcare M&A Guy @HCareAdvisorGuy]

I agree with John and this has been my experience as an FDD advisor working 100s of deals.

Deals die when:

- Financial expectations don't align with reality. PSA: most pro formas die in a rollforward.

- There isn't full disclosure in the operations of the business.

[John Caple @BigJohn043]

I find that most deals are lost to due diligence issues. The biggest issue is that the financials are not reflective of reality. We also often find basic issues like customer concentration or unions are not disclosed. Just looked at a deal where the seller tried to claim that Wal-Mart and Sam's Club are two different customers....

[Steven - Healthcare M&A Guy @HCareAdvisorGuy]

@peterboulden @GDJones1999 @theDSOguy @DentistryUnder1 @HealthcareREguy @ClintFiore i'll raise my hand here on the QoE front. I've done 20+ different practices this year and my clients would never do an acquisition without one.

[Steven - Healthcare M&A Guy @HCareAdvisorGuy]

@MangledCapital @Ins_Brkr You’re the only one who gets it. Thank you for restoring my faith in humanity.

[Steven - Healthcare M&A Guy @HCareAdvisorGuy]

I had an analyst come in to my office to tell me that he was taking another job. I congratulated him and wished him well. Stunned, he asked if I had a counter offer. I said, "No, sounds like a great opportunity and I don't do counters. If you wanted to stay, we could've worked something out but you explored the market, got an offer, and what is going to prevent you from doing that again if I counter?"

[The Random Recruiter @randomrecruiter]

Is it smart to take a counter offer?

In most cases, probably not.

Let’s see what ChatGPT says:

[Steven - Healthcare M&A Guy @HCareAdvisorGuy]

@Ins_Brkr it's WILD. thank you for propelling me to internet stardom.