Q. What about personal expenses that the seller runs through the business? A. The most commonly used fundamental tool for valuation analysis is EBITDA. In the case of a private company with significant personal (e.g. country club dues, fancy cars, etc.) or non-recurring expenses (e.g. fire, lawsuit, etc.), it is appropriate to calculate an adjusted EBITDA and to present a recast or restated financial statement that reflects the normalized financial characteristics of the company along with the actual numbers. However, it is absolutely imperative to disclose, explain, and defend each assumption used to adjust the actual EBITDA in a clear, honest, and forthright manner. Q. What is required during due diligence? A. Due diligence is the verification of all representations made by the seller. Healthcare sellers can expect a buyer to exhaustively review all clinical, operational and financial records. For most sellers this process should require one or two representatives of the buyer to spend a few days at the corporate headquarters of the seller. The buyer should immediately conduct a final analysis of all needed information and proceed to the negotiation of the definitive purchase agreement with the seller. If due diligence verifies the representations of the seller, the definitive purchase agreement should reflect the price and terms agreed to in the letter of intent. The price and terms may be renegotiated up or down after due diligence if new confers are discovered or if the process takes so long that the performance of the company warrants a change to the original agreed price and terms. Q. How do we maintain confidentiality? A. American HealthCare Capital understands the sensitive nature of a divestiture to all parties concerned. We maintain complete confidentiality of proprietary information. Every prospective buyer must sign a binding nondisclosure agreement and the disclosure of any information is strictly limited to appropriate individuals who have a legitimate need to know in order to close the transaction. Q. What is the difference between a “Finder” and a “Broker”? A. “Business Broker” is a legal term of art with a specific meaning: a licensed agent of a principal that is registered with the state department of real estate. As agents of principals, brokers have certain fiduciary responsibilities that entitle them to prepare data, negotiate, and conduct due diligence on behalf of the principals they represent. Because of licensing requirement, business brokers typically limit their practice to a particular state rather than focusing on a specific industry. A “Finder” Is not required to be licensed and is not an agent of the principal: Finders are primarily responsible for making introductions and acting as intermediaries between principals. Finders are usually professionals from a particular industry who are knowledgeable about the national M&A market place of that industry. Although finders may offer their opinions, they do not dispense formal advice, prepare documentation, or negotiate on behalf of sellers or buyers. Principals use finders to identify opportunities but must rely on advice from attorneys, CPAs, and possibly other advisors to analyze and act on the opportunities introduced by the finder. AHC is proud to be one of the leading finders in the healthcare services industry. American HealthCare Capital ∙ Executive Offices 4333 Admiralty Way, Marina del Rey, CA 90292 ∙ Ph 800‐424‐1338 ∙ Fax 310‐437‐4448 www.americanhealthcarecapital.com ∙ info@americanhealthcarecapital.com ©2008 American HealthCare Capital, All Rights Reserved
American Healthcare Capital Brochure
To see the actual publication please follow the link above