In difficult market, deals need to be more secure

ATLANTA - When it comes to acquiring an HME company, buyers need to kick the tires so to speak, said M&A analyst Brad Smith at Medtrade on Monday.

 “It's like a used car,” said Smith, managing director at Vertess during the session, “Deal or No Deal: Buying and Selling a DME Supplier.” “Are you going to want to spend time shining it up? Any buyer wants a return on investment.”

With margins thinner than ever, and a number of providers looking to exit the increasingly difficult HME market, buyers need to ensure sellers have their financials in order, says Steve Griggs, CEO of AeroCare Holdings, which has acquired multiple companies in 2017.

“There's no room for error,” he said. “You need to have a more secure deal than the past. It's harder today to fix mistakes. Every purchaser is looking for a good, healthy company.”

The two most common types of acquisitions at present: financial, where the buyer wants to keep the owner on, and recapitalize and restructure the company; and strategic, where the buyer is looking for a specific growth niche.

Griggs bills himself as a strategic buyer.

“We are looking for something special,” he said. “Maybe you are in a territory we want to expand to or in a line of products that intrigues us, something that piques our interest as a company.”

For an HME owner looking to sell, the best time to sell is when you are on top—not when you are ready to throw up your hands in exasperation, says Smith. To make yourself attractive to buyers play up your expertise and your No. 1 asset: your employees.

“Employees make all the difference,” he said. “ Then, show growth. A great way to show that is with a business plan: Here is our thesis, how we are going to get there, and here's where we want to be.”