Unlocking Value: Key Takeaways from Our M&A Webinar
On October 16, 2024, Mertz Taggart and Maxwell Healthcare Associates presented the second webinar in a three-part series, diving into how advisors evaluate and enhance the value of home health and hospice agencies. Moderated by Jennifer Maxwell, the discussion featured insights from Cory Mertz, Managing Partner at Mertz Taggart, and Jay Duty, COO at Maxwell Healthcare Associates.
Highlights & Key Takeaways
Plan Early to Maximize Value: Cory emphasized the importance of early engagement with advisors, noting that sellers who start planning well in advance can bridge gaps in valuation and improve their market readiness.
Focus on Financial Fundamentals: The speakers underscored critical financial metrics:
Revenue matters: Larger agencies typically command higher multiples.
Target margins: Gross margin should ideally be 45-55% for home health and 50-55% for hospice.
EBITDA margins: Adjusted EBITDA margins between 15-25% for home health and 18-25% for hospice are seen as attractive.
Operational Efficiency Drives Value: Jay highlighted how optimizing intake, scheduling, and revenue cycle management can enhance an agency’s appeal. Addressing workforce management and clinical quality ensures better performance and valuation.
Technology is No Longer Optional: Both panelists agreed that technology plays a crucial role in valuation. Cory noted that EMR compatibility reduces transition risks, while Jay pointed out how advanced tech solutions, such as predictive analytics and workforce management tools, can increase efficiency.
Cultural Alignment Can Seal the Deal: Beyond numbers, buyers look for cultural fit. Cory shared how sellers often choose slightly lower offers from buyers who align with their values and are committed to preserving the agency’s legacy.
Final Thoughts
Maximizing value in M&A requires early preparation, thorough assessments, and a focus on cultural fit. By addressing financial, operational, and technological factors, agencies can better position themselves for a successful sale.
If you are interested in watching the entire Maximizing Value: How Advisors Evaluate Home Health & Hospice Assets webinar, you can find it on our YouTube channel!
If you are contemplating an eventual sale of your home-based care agency, feel free to contact us at info@mertztaggart.com to arrange a confidential discussion about your exit strategy!
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