By Kyle Webster
In today’s M&A landscape, deal activity is on the rise in the healthcare sector despite economic uncertainties. Companies are leveraging M&A to drive growth, acquire modern technologies, and enter new markets. Generally, valuations remain strong for dental practices, driven by elevated levels of liquidity and competition among buyers. However, we are seeing a shift towards more cautious pricing, with a growing focus on strategic fit and long-term value creation. In this landscape, sellers need to be increasingly prioritizing tracking improvements and generating efficiency.
Dentists interested in M&A opportunities can benefit from the rising interest in dealmaking. Healthcare is poised for significant growth, attracting both strategic and financial buyers. Those wishing to capitalize on the current M&A environment will benefit from understanding new processes, priorities, and how to best position their companies for success in today’s market.
How to Prepare for a Sale: The Due Diligence Process
Due diligence is a critical phase in any M&A transaction, involving a comprehensive process, especially in preparation for a sale. The process can also uncover potential issues and be uncomfortable for some sellers, particularly those navigating the process for the first time. To maximize outcome and options, sellers should take a detailed look at their practices and put in the effort prior to making the business available for sale.
To prepare for a sell-side M&A transaction for our clients, Polaris will conduct an in-depth financial review, examining historical performance, revenue streams, and profitability. This helps us understand the target company’s financial health and identify any potential red flags.
We will also perform an operational review, evaluating the target’s operational efficiency, supply chain strength, and overall business model. This insight helps identify where a seller can proactively improve their business to capture additional value or potential benefits a buyer may find in the acquisition to increase the transaction’s appeal.
Finally, we examine legal and compliance aspects to ensure your practice adheres to all relevant laws and regulations. Our legal team carefully reviews contracts, intellectual property rights, and any ongoing litigation. By identifying and flagging potential issues in advance, Polaris also helps clients resolve them, helping “right the ship” and avoid any costly penalties to valuation.
The sellers we support can then use this information to identify their strengths and appropriately document them to generate significant additional return that otherwise may have been overlooked.
Understanding What Buyers Look For
Buyers follow a similar, yet different process to assess whether your business is a good fit for their organization. Buyers think carefully about a target company’s fit, and a reputable buyer will apply a high level of scrutiny to the process of evaluating how well a target company aligns with their strategic goals. This includes evaluating synergies, potential for integration, and cultural compatibility.
Polaris works with sellers to prepare them for the buyer-led risk assessment, which is done to identify and mitigate their risk. This includes evaluating a seller’s financial, operational, and market risks. By understanding the key drivers of our clients’ success, Polaris works to create a robust database of support to ensure our clients’ hard work translates into value at transaction. Without the necessary support, this value typically goes unrecognized by the market.
Buyers will also want to plan for a post-acquisition integration as part of their due diligence process to support a smooth transition and realize the anticipated benefits of the acquisition.
By working with an expert that thoroughly understands what sellers should anticipate during the sales process and how to most effectively prepare for buyers, dentists who are interested in selling their businesses will be best positioned to achieve their maximum value in an M&A transaction.
Talk to the Polaris team to learn more about maximizing your business value or preparing your business to sell.
