Healthcare M&A Readiness
FBFK Law Shareholder Cody W. Dumas recently authored a Law360 article examining how healthcare business owners can better prepare for a potential sale as buyers increasingly rely on artificial intelligence, data analytics, and more extensive regulatory diligence.
In “Prepping Health Businesses For Sale In A Data-Driven Market,” Dumas explains that preparation can directly affect valuation, timing, and negotiating leverage in healthcare mergers and acquisitions. Private equity firms and strategic buyers continue to pursue physician practices, med spas, telehealth platforms, management services organizations, and other healthcare businesses, even as regulatory scrutiny increases.
A New Era of Healthcare M&A Due Diligence
Technology is changing how buyers evaluate potential acquisitions. AI and analytics tools can review claims, contracts, corporate records, compliance materials, and other information faster and in greater detail than traditional diligence processes. As a result, coding issues, lapsed filings, contractual inconsistencies, and other potential concerns may surface much earlier in a transaction and can influence pricing or deal terms.
Dumas notes that healthcare buyers are closely examining areas including financial performance, billing and coding practices, provider and referral agreements, corporate records, ownership structures, licensing, payer enrollment, and compliance with applicable healthcare regulations. Data privacy and cybersecurity are also receiving increased attention, with buyers looking beyond written policies to determine whether appropriate safeguards are actually implemented and followed.
Preparing Before a Buyer Arrives
For owners considering a future transaction, Dumas recommends beginning the preparation process 12 to 24 months before a potential sale. Some issues, including corporate filings, provider agreements, noncompetes, and referral arrangements, may require significant time to address and cannot always be resolved on a buyer’s timeline.
Preparation also extends beyond documentation. Retaining physicians and key employees, preserving institutional knowledge, and planning for operational transitions can help protect the value of the business through closing and integration.
As buyers and regulators increasingly use sophisticated analytics to identify potential risks, healthcare businesses that prepare early may be better positioned to navigate diligence, preserve value, and maintain greater control over the transaction process.