Increasing Value in Preparation for a Sale

Increasing the value of your behavioral/mental health company before selling it requires careful preparation and strategic actions. There are essential value drivers to consider if you want to maximize the value of your company and prepare for a successful sale. Find out more in this article.

Ways to Increase the Value of Your Business

Financial Performance Optimization:

Focus on improving the financial performance of your company. Ensure accurate financial reporting, maintain clean and organized financial records, and demonstrate consistent revenue growth and profitability over a time period, a trend. Identify areas for cost optimization, efficient resource allocation, and revenue enhancement to showcase a strong financial track record. Show a straightforward path to increased future revenues and profits, an easily able to follow game plan. 

Streamline Operations and Enhance Efficiency:

Evaluate your operational processes to identify areas for improvement and increased efficiency, honestly. Streamline workflows, eliminate unnecessary steps, and automate where possible to enhance productivity and reduce variable costs. Efficient operations demonstrate the potential for scalability and attract potential buyers looking for well-managed companies. A company is also more valueable on its own if it runs smoothly without you. Put processes and procedures in place that allow anyone to come in and operate business as usual.

Develop a Strong Leadership Team:

Build a strong leadership team capable of managing and driving the company’s growth, building a strong culture, and leading by example, servant leaders. Ensure you have capable executives and managers in key positions, with the expertise and experience necessary to lead the company effectively, that know their numbers/metrics/KPIs and their people, what motivates them, how they want to be recognized, etc. A competent leadership team provides confidence to potential buyers about the company’s future success and reduces dependence on any individual. Weak leadership that doesn’t take responsibility and has excuses is also the cause of many deals not executing or being retraded for a lower value. Human capital is most important/valuable.

Diversify and Expand Service Offerings:

Consider expanding your service offerings or diversifying into related areas within the behavioral/mental health industry. By broadening your range of services, you can attract a larger customer base and increase the perceived value of your company. Identify emerging trends and align your offerings with market demand to demonstrate growth potential. This advice is very generalized. There is nothing wrong with specializing in a niche, and many buyers like that, but you can increase value by offering new lines of service, levels of care, geographies, etc. so that it can be easier for a new operator to scale and use their synergies to expand offerings and revenue sources.

Enhance Branding and Marketing:

Invest in branding and marketing efforts to strengthen your company’s reputation and visibility within the industry. Why do you do what you do? Develop a compelling brand identity, improve your online presence, and implement effective marketing strategies to attract new clients and build a solid referral network. Multiple sources, as well as a comprehensive marketing strategy utilizing digital as well as boots on the ground and referring providers, all help a future buyer feel more comfortable about being able to replicate your revenue into the future and grow it. A strong brand reputation enhances the market value of your company. Knowing what your cost to acquire a patient is can be very helpful. Some buyers have metrics around this number, such as not costing more than 3 times your average daily rate to acquire a patient, etc. 

Establish Strong Referral Networks and Partnerships:

Build strong relationships with referring professionals, healthcare providers, and organizations in the behavioral/mental health space. Use a business development team and outreach staff to accomplish building real strong relationships based on quality care and personal relationships. Establish collaborative partnerships and referral networks to expand your client base and demonstrate your company’s value as a trusted and reliable provider. These networks and partnerships can significantly impact the perceived value of your company during the sale process.

Enhance Compliance and Risk Management:

Ensure your company is compliant with all relevant healthcare regulations, including HIPAA, privacy laws, and state-specific requirements. If you are in the middle of investigations, just disclose, do not hide issues, resolve them or divulge them. Implement robust compliance programs, risk management processes, and quality assurance measures. Buyers place great importance on compliance, and a well-managed company with low regulatory risks is more attractive and valuable. On the other hand, any possible question of untruthfulness or hiding anything will end a deal very quickly, or even worse, cause issues after the deal is done. 

Intellectual Property and Technology:

Identify any intellectual property assets, proprietary treatment methodologies, or technology platforms that differentiate your company. Protect and leverage these assets to demonstrate a competitive advantage and attract potential buyers seeking unique and innovative solutions. Intellectual property and technology can significantly enhance the value of your company. This is less common, but a very important aspect if present.

Engage Professional Advisors:

Seek guidance from experienced professionals, such as business brokers, M&A advisors, investment bankers, healthcare attorneys, and accountants who specialize in the behavioral/mental health industry. They can assist you in strategy and growth, valuing your company, preparing the necessary documentation and materials, building a market of potential buyers, and negotiating favorable terms during the sale process. Choose wisely, but be sure to work with someone, someone you like and trust and has some experience in the field. You’ll be working with them a lot.

Prepare Comprehensive Documentation:

Compile comprehensive documentation about your company, including financial statements, contracts, licenses, insurance policies, compliance records, operational processes, growth projections, patient censuses, staff information, opportunities, and real estate. Organize these documents in a due diligence package to provide potential buyers with a clear understanding of your company’s value and growth potential. If you have hired someone capable, this should be organized, branded, made to look presentable, and checked by them, as well as identified for weak spots and portions to emphasize. Can be organized into a confidential information memorandum, but regardless should be kept confidential in a secure location to be accessed by vetted, qualified, interested buyers. 

Work With Professional Advisors And Industry Experts To Maximize Your Business Sale

In conclusion, increasing the value of your behavioral/mental health company before a sale requires strategic planning, financial optimization, operational efficiency, strong leadership, diversification, branding, compliance, and complete attractive data. By undertaking these steps and engaging professional support, you can position your company for a successful sale and maximize its value in the marketplace.