Mergers & Acquisitions: Clean house for fast sale

Monday, November 21, 2011

A. When you're selling a home, everyone understands the importance of tidying up and showing the house in its best light. As the seller, you clean and organize the closets, touch up paint, and gather documentation on improvements to show that the home is in good condition and no major repairs are needed. The same concept should be applied to your company.  

When selling a DME company, pay specific attention to the threat of payer audits. For a faster sale, demonstrate compliance with Medicare coverage guidelines and the ability to easily weather post and pre-pay audits. Just saying you follow the guidelines isn't enough. While most buyers will require you to indemnify them for take-backs or recoupments on claims occurring before the sale, the buyer will still be relying upon your documentation and physician orders for ongoing, rental items and refill products. As the seller, you will need to ensure you have the right items in the files to be able to continue billing for services after the sale.

If the burden of proof is placed on the buyer, it will slow down the sale and could lead to lower price negotiations. I recommend a simple first step: hire an independent, outside source to audit a percentage of the patient files. While internal auditing is always considered good practice, the independent unbiased review by a knowledgeable expert will give buyers the confidence they need to finalize the sale at the price you want. The audit should be detailed. The audit results will demonstrate that your company finances are secure, procedures correct, and the price fair. If mistakes or problems are found, you have the opportunity to correct internal procedures before a buyer inspects your business.

Stephanie Morgan Greene is general counsel for Harrington Management Group, also known as The Audit Team. Reach her at or 888-833-3478.