When the founders of a behavioral health services platform decided it was time to explore strategic options, they knew preparation would be key. Here's how we helped them achieve an exceptional outcome.
Company Profile (Anonymized)
- Sector: Behavioral Health Services
- Revenue: $15-25M
- Model: Multi-site outpatient services
- Locations: 8 clinics across 3 states
The Challenge
The founders had built a differentiated outpatient behavioral health platform with strong clinical outcomes and a loyal patient base. However, they faced several challenges going into a process:
- No prior M&A experience — First-time sellers
- Compliance concerns — Needed to address historical billing practices
- Key person risk — Founder heavily involved in clinical operations
- Geographic concentration — Most locations in one metro area
Pre-Process Preparation
We spent 3 months preparing before going to market:
Compliance Remediation
Engaged a healthcare regulatory consultant to:
- Conduct a mock audit
- Address historical billing issues
- Document corrective actions
Financial Preparation
- Commissioned a sell-side Quality of Earnings report
- Normalized financials for owner compensation
- Built a detailed financial model
Operational Documentation
- Developed clinical outcomes dashboard
- Documented standard operating procedures
- Created organizational structure post-transition plan
The preparation phase felt long, but it paid dividends during diligence. We had answers ready for every question, which gave buyers confidence.
The Process
Phase 1: Strategic Outreach (Weeks 1-4)
We prepared a targeted list of:
- PE firms with healthcare services investments
- Strategic acquirers in behavioral health
- Healthcare systems seeking outpatient capabilities
Phase 2: Management Presentations (Weeks 5-8)
The founders presented to 12 qualified buyers, highlighting:
- Clinical outcomes differentiation
- Growth trajectory and expansion plans
- Team depth beyond founders
Phase 3: Final Bids & Negotiation (Weeks 9-14)
We received 4 competitive final bids and:
- Negotiated terms across price, structure, and employment
- Addressed post-closing operational requirements
- Selected buyer aligned with founders' values
Key Success Factors
Key Takeaway
For healthcare services businesses, pre-transaction compliance work isn't optional — it's essential. Buyers will find issues during diligence; better to address them proactively.
What Drove the Premium
- Clean compliance posture — Proactive remediation removed risk premium
- Strong clinical outcomes — Data-driven proof of quality
- Competitive process — Multiple interested buyers created tension
- Professional presentation — Founders were well-prepared for every meeting
Outcome
The founders achieved:
- Premium valuation above initial expectations
- Favorable earnout structure tied to achievable targets
- Leadership roles for key clinical staff
- Cultural fit with a buyer who shared their mission
Considering a sale of your healthcare services business? Let's talk about preparation and timing.
