9 Questions to Ask Before You Sell BY R U S S F O S T E R A N D S H E I L A S T E P H E N S
There are several factors to consider before making and pursuing the decision to sell a health plan or provider organization. Based on our experience, these nine questions are the most important to ask when contemplating a potential sale: 1. Why are we selling? 2. Who should know and when? 3. Is it the right time to sell? 4. What kind of buyer are we looking for? 5. What transaction structure makes sense? 6. What kind of consultants do we need? 7. Do we need a fair market value analysis?
Russell Foster
8. Should we sign a nondisclosure agreement first? 9. What information and data should we give the buyer? Considering each of these questions should help move internal discussion from “just thinking about a sale” to a more informed and thoughtful decision.
1. WHY ARE WE SELLING? Why are you considering a sale? Is it due to: • Market volatility • Declining profitability
Sheila Stephens
• Loss of market share • Potential insolvency • Compliance or regulatory/licensing issues and concerns • Investors are restless and want their money out • Key leaders want to retire • Other reasons Before putting out the for-sale sign, ask yourself whether there are other viable strategies that might allow the organization to meet its business objectives and avoid the need to sell. Engaging with legal counsel, tax advisers, and consultants early in the decision-making process will help clarify your options and perhaps shed light on possibilities you had not considered. If you decide to sell, it is critical that the board and executive team establish a transition team. While it is the transition team’s job to facilitate the sale, it is the leadership team’s responsibility, along with the board and other key stakeholders, to maintain daily operations in full compliance until the sale has closed and the buyer is in control. Identifying and bringing the transition team and consultants together as soon as possible will have a direct impact on the success of the sale.
30 l JOURNAL OF AMERICA’S PHYSICIAN GROUPS
Fall 2020
more time “The spent thinking through and planning your sale, the more successful it will be.”
