It's still a buyer's market, analysts say

YARMOUTH, Maine - Competitive bidding drove acquisition activity in 2013 and analysts say it will power decisions in the year ahead.

“It's all about the contracts and who wants what and when,” said Don Davis, president of Duckridge Advisors. “I really anticipate a year of consolidation with corporate entities buying family entities.”

That means, while the big get bigger, the industry is rapidly shedding mom-and-pops, say analysts.

Contract holders fare slightly better when it comes to selling price, but it's still a buyer's market, say analysts.

“The buyers are buying if they can get their price,” said Bruce Burns, president of Affinity Ventures. “There will still be sellers that do well, but the valuations are fairly low compared to what they have been. It all depends on the needs of the big players.”

With Round 2 of the program well underway and the start of the Round 1 re-compete on Jan. 1, competitive bidding has become the new normal, say analysts.

“The uncertainty is really gone,” said Rick Glass, president of Steven Richards & Associates. “They feel confident that this is what reimbursement is for the foreseeable future and they're judging how that fits into making a viable business and what these transactions are worth.”

Other market activity over the past year centered on markets not impacted by competitive bidding, say analysts.

“We saw people getting into complex rehab, which is a significant change,” said Patrick Clifford, managing director at The Braff Group. “We also saw more movement into supply fulfillment. Finally, there were buyers looking to acquire companies in rural markets that are not affected by bidding.”

Looking ahead to 2014, most analysts say they are optimistic.

“I think there's a lot of opportunity in HME,” said Jonathan Sadock, president/CEO of Paragon Ventures. “These are good businesses with recurring revenue. That attracts buyers.”