M&A: Be thorough, thoughtful

Q. I am interested in acquiring an HME business. How do I find a good business and what should I do to assess the opportunity?

A. Start your search by developing an acquisition profile and financing strategy. The profile should determine the business model you are most interested in acquiring.  The financing strategy will determine the size and valuation of a business you are able to afford. Recent sales of similar businesses will give you some insight into current market valuations. While some comparable sales data may be found on the Internet many transactions are private and terms not disclosed. An experienced M&A advisory can often be a valued resource to ascertain valuation metrics or perform a formal valuation.

Are you considering specializing in a particular therapy such as sleep, rehab, oxygen or general medical supply? Do you want to participate as a provider to Medicare, Medicaid and/or third-party insurance patients? Do the growing retail markets interest you? These are all areas that should be included in your acquisition profile. Remember to maintain an open mind to other entrepreneurial opportunities you might find during your search.

An Internet search is a good starting place to begin researching available opportunities. BizBuySell.com, BizQuest.com and some M&A advisories publish acquisition opportunities on-line.  Contact investment banks and business brokers who specialize in the HME sector and inquire about available opportunities which match your acquisition profile and financing availability. They often publish articles about various businesses and may help you identify one of specific interest.  Don't be shy in your search.  Reach out to business owners directly to let them know about your interest.  Ask people you may know in the industry for references.

Assessing an acquisition opportunity requires thorough and thoughtful consideration. Initially you want to understand the business model, its historical financial performance and current trajectory. When you find something of interest, engage and communicate with the seller or their advisers.