How to Sell My Healthcare Business

When selling your healthcare business, there are two things to consider:

• First, the general process for exiting your business. Based on our experience working with M&A advisors and business owners, it generally takes three years to exit a business. This journey begins with exit planning, where you’ll clarify your goals and prepare your business for sale. From there, you’ll move through the M&A process, which includes valuing your business, crafting a compelling marketing strategy, and evaluating buyer interest. Finally, the process culminates in executing a Letter of Intent (LOI), skillfully navigating negotiations, and structuring and closing the deal to achieve a successful outcome. You can view the full timeline here.

• Second, the unique factors specific to the healthcare industry. These include evaluating your company’s value amidst evolving healthcare regulations, developing a comprehensive handover plan, and targeting buyers who have the expertise and capital to acquire and operate a healthcare business.

In this post, we explain the most reliable ways to successfully sell a healthcare business, including:

• How to start exit planning, optimize your healthcare business for sale, and create a handover plan
• How to engage an M&A advisor with experience in selling healthcare companies to assist with accurate business valuations, developing marketing materials, and targeting buyers
• A rundown of the types of healthcare buyers you could target in partnership with your M&A advisor

A key part of selling your healthcare business is partnering with the right M&A advisor — one with relevant deal experience, a deep understanding of your sub-industry, and a network of buyers to help you achieve the best outcome. For business owners, finding such an advisor can be challenging. At Axial, we have a network of over 2,000 advisors and can handpick 3–5 of the most suitable ones to help you manage your sale. Contact us to get started.

How to Begin Exit Planning

Before engaging an M&A advisor or starting the selling process, business owners must address some foundational exit planning. This involves:

• Understanding your reasons for selling
• Optimizing your business processes
• Creating a handover plan

Some of the questions you’ll face during exit and transition planning are similar to those any business owner needs to answer — especially if your healthcare business falls into the staffing, technology, manufacturing, or distribution sectors. However, there are also considerations unique to healthcare, particularly for medical providers and the owners of healthcare services companies.

In the section below, we’ll explore examples of these considerations and provide strategies to effectively tackle them.

Understand Your Motives for Selling

Exit planning starts with the owner understanding and clearly articulating their reason for selling. If you can’t explain why you want to exit the business — and why now — it may signal to you that you’re not as committed to the sale as you thought. A lack of clarity can create issues with prospective buyers, who will want to know you’re certain about your exit before they proceed with their own process.

There are many reasons to sell a business. At Axial, we frequently work with owners who want to:

• Retire
• Seize a new professional opportunity (often funded by the sale of their first business)
• Step back due to health changes or caring responsibilities
• Leave because they’ve lost their passion for the business

In healthcare, particularly in private practice, motivation can differ.

Many healthcare business owners start their company, only to realize they prefer practicing medicine over handling administrative tasks. These owners often seek to sell a controlling interest in their practice, allowing them to stay on as minority owners while focusing on treating patients or pursuing research.

Understanding your motivation is key — it helps define your ideal buyer profile and informs your next steps.

Streamline Operations

Once you clearly understand your motives and are committed to the exit, it’s time to streamline your company’s operations. By optimizing your business before approaching potential buyers, you can attract serious interest, reduce perceived risks, and ultimately secure a better sale price.

There are many ways to optimize your business (explore our post Preparing a Business for Sale in 3 Steps for more information). For healthcare companies, it’s especially crucial to prioritize:

• Improving technology: Modern, HIPAA-compliant technology — especially for record-keeping — can make your business more attractive to potential buyers. For example, migrating to a more advanced patient management or EHR system before marketing your business can enhance its appeal to buyers.

• Anticipating regulatory changes: Regulations, such as nurse-patient ratios, can vary by state. If your state changes these regulations, you may need to hire additional nurses to maintain the same level of care. This can increase costs, reduce profit margins, and lead to recruiting challenges due to various market conditions (staffing is one of the top challenges healthcare companies face right now). Buyers will consider such factors when evaluating your company, so staying up to date with regulatory changes is essential to ensure your sale proceeds smoothly.

• Mitigating the impact of regulatory changes: While regulatory changes can impact company metrics, owners can take proactive steps. For instance, if you’re aware that factors beyond your control could affect your annual revenue and reduce the value of your business, you could assess your reimbursement risk to decrease reliance on more volatile revenue streams. This might involve shifting the balance between private pay patients and those covered by Medicare or Medicaid. Such measures can help stabilize your metrics and make your business more appealing to the right buyer, even amid regulatory challenges.

• Checking leases and licenses: Whether you provide home healthcare or manufacture a medical device, licences are essential to any healthcare business. As you progress in your exit strategy, make sure your licences are up to date — and transferable when appropriate — so the new owner can continue operating the business after you step away. It’s also important to review documents like leases, as your location and premises may significantly impact your business’s value.

Identifying these opportunities early in the exit process offers two key advantages. First, it helps you prepare by gaining deeper insights into your business operations, revealing its true value. Second, it streamlines later-stage processes, such as addressing buyer inquiries during due diligence, making the finalization of the sale smoother and more efficient.

Create a Handover Plan

Buyers will want to see a handover plan to understand how your business will maintain its value and relationships after your exit.

Your handover plan will differ based on your exit intentions. For example, it will look different if you plan to retire and leave the business entirely, versus selling a majority of it to a buyer, like a healthcare network, while retaining minority ownership and continuing to work there.

If You Intend to Stay at Your Business

If your exit strategy involves finding someone with the expertise to run your business while you remain involved, your handover plan should include:

• The business tasks you currently handle that you want to pass on
• Any support staff or systems you’re already using to manage the business
• Detailed notes on how you envision the business operating after you step back. This will help identify buyers who align with your vision and ensure the business continues to run smoothly as you transition to a minority partner.

If You Intend to Exit Completely

If your plan is to leave your business entirely, your handover will include a detailed description of how you’ll replace yourself. For healthcare companies like private practices, this will involve designating someone to take over your medical responsibilities. For example, having a doctor on staff who is familiar with your patient list can help minimize the risk of losing existing patients after your departure.

Even if your business isn’t patient-facing, a handover plan is still essential before engaging buyers.

For example, owners of businesses that manufacture medical equipment still need a plan to remove key person dependencies so their company can retain existing clients and continue to meet high standards. This can involve identifying who will take over the tasks previously done by the owner, documenting processes for the new management team, and ensuring that customer relationships won’t be disrupted during the transfer. This helps to ensure continuity when the new owner comes on board. If you intend to exit your company completely, the goal is to make your involvement redundant, allowing the business to run seamlessly without you.

Once you have a handle on your motives, your strategy for streamlining your business, and your handover plan, you can move on to the next stage of the sale process: finding and partnering with an experienced M&A advisor.

M&A advisors play a key role in helping you sell your healthcare business. They assist you with:

• Obtaining an accurate business valuation
• Building marketing materials to engage buyers
• Targeting your ideal buyers
• Managing interest from buyers, including evaluating IOIs and LOIs
• Negotiations and closing the deal

Partnering with an M&A advisor significantly boosts your chances of success: you gain access to 10x more buyers (increasing the likelihood of finding the perfect fit), improve your odds of selling by 75%, and position yourself to secure a substantially better price for your business.

How to Engage an M&A Advisor

We’ve discussed the wide range of business types within healthcare and how their value and buyer pool can be influenced by market conditions, changing regulations, and other sub-industry specific factors. Given these variables, you’re more likely to successfully exit your healthcare business if you work with an M&A advisor who has a proven track record in your specific sub-sector.

Your advisor will handle essential processes as you engage buyers and execute the sale. Their expertise in these areas helps maximize the value of your company and gives you the time you need to continue running your healthcare business while negotiations unfold.

An advisor with specialized healthcare expertise offers:

• A nuanced understanding of healthcare business valuation: They can assess your business’s scalability, identify opportunities for expansion, and understand how niche specialties and treatment effectiveness impact value. In contrast, an advisor without healthcare experience may be proficient at analyzing financial data, like balance sheets and income statements, but might struggle to evaluate the qualitative factors that set healthcare businesses apart.

• Up-to-date knowledge of the M&A landscape in your subsector: Experienced advisors stay involved with deals in your industry, allowing them to identify trends affecting your business’s value. For instance, with an aging population, healthcare businesses focused on senior care are becoming more attractive. Even if this isn’t your focus, your advisor can help identify parts of your business that could cater to this demand and market them to buyers.

• An extensive buyer network and targeting expertise: While healthcare professionals may receive buyer inquiries or attend targeted events, your advisor’s network is far more extensive. With access to dozens of potential buyers, they’ll know the best method to reach them (broad vs. limited auction) and create materials like teasers and CIMs tailored to the information buyers seek. This helps you find buyers who match your ideal profile.

• A cool head during negotiations: The professionalism and detachment an advisor brings are crucial in the final stages of a sale. For business owners who plan to remain at the company, this is especially important. If you’re particular about the successor you’ll work for, your advisor can gather insights on their plans without confrontation, increasing the likelihood of closing the deal on good terms.

Your advisor is the best resource you have for educating yourself about the value of your business, marketing your company to attract the right prospective buyers, and mitigating the challenges faced by healthcare businesses during the M&A process.

The right pairing means the difference between a successful exit and a failed one, so, at Axial, we specialize in helping small-to-midsize business owners find the best advisor for them.

We start by pairing you with an Exit Consultant who gets to know your business and your exit goals.

Your Exit Consultant will leverage Axial’s network of 2,000+ M&A advisors to create a short list of candidates with:

• Recent, relevant deal experience in your sub-sector of the healthcare industry.
• Proven ability to progress potential buyers from initial interest to submitted bids.
• Strong down-funnel success, including the number of bids generated and successful sales completed within the Axial network.
• Positive feedback on professionalism, reputation, and responsiveness.

We’ll send you a curated list of 3–5 qualified healthcare advisors, complete with detailed insights to help you evaluate your options and resources to prepare for meetings with your candidates.

4 Examples of Healthcare Buyers You Can Find Through Your M&A Advisor

Once you’ve found your ideal advisor through Axial, these are some of the types of buyers they could connect you with.

1. Latticework Capital

Headquartered in Dallas, Latticework Capital Management is a growth-oriented private equity firm with an exclusive interest in healthcare and life sciences.

Their team has 100 years of combined experience in healthcare and investments, along with a network of industry executives, who can help healthcare companies grow to their full potential. They have experience with many of the sub-sectors the healthcare industry represents. For example, their recent transactions have included healthcare services, pharmaceutical manufacturing, and healthcare warehousing, equipment repair, and maintenance.

Latticework has completed over 95 transactions, representing over $1.5 billion of equity investments. Your advisor might approach Latticework as a potential buyer if your business deals with healthcare logistics — like supplies, facilities, distribution etc. — healthcare or bio technology, managed healthcare, or pharmaceuticals.

2. Honor Health Network

Headquartered in Ridgefield, New Jersey, Honor Health Network is a holding company that provides home care, health care, and adult day care services.

At its core, Honor Health Network operates as a dynamic, people-centered organization committed to the well-being of its employees, patients, and the communities it serves. The company’s philosophy is rooted in the belief that its success is intrinsically tied to the health and growth of the individuals and communities it supports.

Recently, Honor Health Network acquired a healthcare services company via Axial to further expand its reach and impact. Your advisor might approach Honor Health if you operate in the home care sub-sector.

3. Martis Capital

With offices in both Palo Alto and Washington DC, Martis Capital is a private investment firm that works exclusively in the healthcare and wellness industry.

They target middle-market companies and growth situations in North America, where their team has an edge in understanding the opportunity, performing due diligence, and adding value post close.

Their investment team brings over 125 years of combined experience in investments and healthcare, and leverages a vast network of relationships with healthcare executives, clinicians, scientists, and regulators to drive the growth and success of the companies they partner with.

Martis has completed over 27 transactions since inception (a mixture of both investing in companies and acquiring them). Your advisor might approach Martis if you operate in the healthcare services, technology, or equipment sub-sectors.

4. Fulcrum Equity Partners

Headquartered in Atlanta, Fulcrum is a growth equity firm managing approximately $1 billion in assets. They specialize in equity investments for rapidly growing businesses led by strong entrepreneurs and management teams.

With a proven track record since 2000, Fulcrum has invested in a wide range of companies in the healthcare sector, including 19 healthcare services companies and 9 healthcare information technology businesses.

Your advisor might approach Fulcrum if you operate in the healthcare services or technology sub-sectors.

Ready to find the right buyer for your company? Let us connect you with an M&A advisor who can help.

More Resources for Healthcare Business Owners

If you’re considering selling your business, Axial’s business owner hub offers a wealth of tools and insights, including both general and healthcare-specific resources.

From planning your exit and optimizing your business to finding the ideal advisor, our hub equips you with the tools and insights needed to navigate the sale process confidently:

• Healthcare Market Outlook: Insights From Axial’s Top Dealmakers
• The Top 50 Lower Middle Market Healthcare Investors & M&A Advisors [2024]
• Industry Report: Healthcare Q4 2024
• Selling a Business Checklist: 6 Steps to Sell Your Business
• Maximising Your Business Sale
• How to Find the Best M&A Advisor to Sell Your Business
• Ask These Questions Before Hiring an M&A Advisor