Buyers scramble into action

YARMOUTH, Maine - With early signs of spring came a slow thaw in the M&A market for HME businesses, as bidders in the first round of competitive bidding learned whether they had won or lost bids. "It's a zoo here," said Jonathan Sadock, CEO of Paragon Ventures in Philadelphia. "People that have been sitting on the sidelines can start to move forward." Without a fee schedule, determining the value of a company has been difficult, say analysts. Transactions for 2007 were down: 43 deals completed compared to 60 the year before, according to the Pittsburgh, Pa.-based The Braff Group. Most of those deals involved smaller companies buying locally, said Dexter Braff, president. "Many of these were relatively small transactions, below $1 million," he said. "Competitive bidding could drive some activity, but my sense is people that want to be in those areas are already there." Rick Glass, president of Tarpon Springs, Fla.-based Steven Richards & Associates, said he's seen a lot of "scrambling" since contract winners were notified. "There are a lot of really small companies that got in that I don't think will be able to service these contracts," he said. "Some larger companies that did not get contracts are looking to acquire somebody that did, and also larger companies that did get contracts but may not have that big of a presence are looking to expand." Buyers are already looking ahead to round 2, said industry watchers. "Some are saying cuts in the second round may be more aggressive," said Bruce Burns, president of Affinity Ventures in Albuquerque, N.M. "At least in the first and second phase, cuts will probably be in the same range." HME