Season 2 Episode 1: Building Value in Infusion: Data, Compliance, and Deal Readiness

As a professional working in the health care sector, if you ever asked yourself, what does the future of health care look like? How can we innovate health care delivery to positively affect patient health? Are we delivering the best possible patient care in the United States? Those are the questions that we will delve into with guests each week on the bright minds in health care delivery podcast to uncover the latest trends in innovations in health care strategy. So sit back, put on your thinking gap, and join us as we consider how to disrupt the way millions of Americans receive health care. Welcome to the Bright Mines in health care delivery podcast. I'm Eric Tower, a lawyer at BlankRome, advising clients on a range of health care transactional and operational matters. In this episode, I have the pleasure of talking to Rob Monahan, who I've known for longer than either of us cares to remember. Rob, can you please tell listeners a little bit about yourself? Sure. I'm a managing partner of triangle health care advisors where a cell-side advisory firm that specializes in health care services, and we do a lot of work in the home infusion and ambulatory infusion care space. My background is that I was a former banker way back when, after that went into the corporate development world, where I was on the mergers and acquisition teams at OmniCare and Cincinnati in the '90s and Option Care, the home infusion provider in the 2000s and then Walgreens in the late 2010s. And then for the last seven years, almost, we've been on the cell-side helping individual sellers to sell their businesses to mainly private equity and corporate buyers. Let's take it from the top a little bit. You and I first started interacting way back in the OmniCare days, and OmniCare was a really interesting company because to me, it was one of the original roll-ups in kind of the ambulatory space, and I just learned a ton working with you and working with everyone at OmniCare. Let's start this off with what did you learn from OmniCare that you kind of carry forward and you apply representing people to this day? I had been an investment banker with Lemur Brothers prior to OmniCare and then got my MBA, and when I went to OmniCare, it was really the best education I've gotten in mergers and acquisitions. I was a young guy, probably 24 years old, and given the responsibility to just go out and get deals and then to see them from beginning through the close and actually even beyond the close-in to the post-closing payments and seeing how things worked out. It was a great learning experience where we learned how to talk to sellers. When we did do a lot of deals there, I did myself probably 40 deals in four years, but the great thing about working in that environment is you're working with really strong advisors like Eric and others who teach you everything. If you're willing to learn as a young person and sit and talk to them about why are we doing it a certain way? You learn all the accounting on it, you learn the tax issues, the lawyers, you learn all the aspects of the purchase agreements and why we're sticking on certain requests and giving in on others and compromising on certain things. But are the important reps and warranties, what are the important indemnification issues and things that actually cost money to the sellers potentially or cause them risk or potentially cause risk to the buyer and then working through the financials on the businesses and working with the owners to understand what their businesses are really doing and why they're in the business so you get a good sense of just business in general. Then all that kind of comes together and you really understand how the deal works and how all the different pieces come together and the whole process of it getting through the due diligence stage and then how do you keep it going post-closing and how do you structure the deal in a way that is legal and permissible in the under the healthcare rules and that allows the owner to still have some incentives going forward to continue to operate the business as they had prior to the deal closing. You're going to run into little issues and I could say that I don't think on any of the deals I worked on it on OmniCare and I'd say out of all the deals I ever worked on we never got really two crosswise from people and we might have had three out of hundreds that resulted in any kind of legal issues that people had to fight at some point because it was always things that you could work out typically if you structured it right on the legal document and you really pushed a lot of potential problems a way that could otherwise develop. So it was the best learning experience. I think of my career really learned a lot in four years there doing deals I think of the whole process and I've used I've learned something every year since then but that was a very steep learning curve I would say. Teasing out what you said it kind of taught you the 360 degree view. You definitely had to deal directly with the sellers. You had to understand the levers within the company. You had to deal with the outside advisors. You really had to also deal with the repercussions when the deal closed and how the what the fallout would be for better or worse. Yeah we got to see what happened after the deal closed and make sure that it was tracking to our budgets and we're held responsible for the financial performance of the business post closing and I always myself thought we were as the deal guy you're kind of responsible for the first two years because after that really operation should be running the business or working with the former owner to run the business and make sure that it keeps going. But first couple of years I think for the budget is on the guy who's doing the deal or putting the budget together. That sort of difference I found I opened when I started doing the healthcare deals. The distinction between the person running the business and the one putting together the deal. I had to get a lot of sign off. The other interesting thing about working in a corporate environment is typically you have a pretty big team working with you from all different aspects of the company and none of them report to you. Getting them to actually do what you want them to do in terms of signing off on things you really had to keep on top of that as well which was sometimes the harder of the job. You know it's managing people who don't report to you and obviously you'd have to have strong push from the senior management to at the very top levels to make it a priority for them because they all have day jobs as well as working on individual deals. That's true. The one thing I noticed from the deals in the '90s in general was that a lot of them were more consolidating fragmented industries and the value proposition was the simple act of consolidating the businesses themselves. Whereas within limits today a lot of times when people are coming in and they're investing in businesses they're also looking to kind of drive it to a particular direction. So I just want to introduce that idea because that's sort of what I'm seeing particularly now in the infusion market and some of the other ones. It's not just a matter of grabbing a bunch of disparate businesses and kind of running them together. There are a lot of other undercurrents in the healthcare system that people are trying to address needs and issues and get reimbursement for but I was wondering what your reaction would be to that statement. Well for like an omni care the first there was a couple phases I think to that roll up. One was just aggregating volume and the second thing would be sort of a multiple arbitrage because I think at the time when we were doing deals omni care might have had a 30 multiple on its PE on its price to earnings ratio and we were buying things that they think ten times. So we were getting three dollars for every dollar that we gave away in terms of earnings. And then if you looked at I'd say the other piece they would add would be they had synergies which were legitimate primarily around purchasing was the only one that was really counted and it was basically we could get their list of top one hundred drugs 50 say 50 generic and 50 brands and have a very good sense of how much could add to the bottom line. So we could see deals sometimes we saw deals they were making you know half a million dollars and we would end up being able to make a million dollars of EBITDA based on just some of the quantifiable synergies that we brought to the table and I'd say that I think as you do more deals you get you know I they have a thesis typically the buyers these days and they're like they want to be in one aspect of the business more so than others and they tend to not like certain parts of any business that they're looking at so nowadays it seems like everyone wants to be in the biologics more so than in the core infusion products which are like your old school home infusion antibiotics and TPN and steroids and those type of products were just still pretty profitable depending on the payer and are pretty I think that market is actually getting to the point where there are people sort of leaving that business a little bit so it's probably a little less competitive than it had been in the past and you can pick up probably more of that business easier sometimes these days. One thing that fascinated me about some of the deals in the 90s and not on me care but maybe others was how the buyers viewed the business in the case of home oxygen which I did a lot of work with for quite a while really wanting that line of business but a lot of them sold other forms of durable medical equipment the buyer would just functionally value that at zero and shut it down because that wasn't a core focus of theirs and I think some of the sellers had a hard time wrapping their heads around this idea that what do you mean I've spent all this time and I've dealt this and someone basically just takes everything throws in a dumpster and says we're done with a different psychology yeah I'd say a lot of the entrepreneurs out there they just want business you know what I mean the smart ones really go after the most lucrative business but a lot of them have a problem saying no to any kind of profitable line of business that they can get into it's hard to say no sometimes so I think what happens is you have the buyer comes in and they just know what they want and it's they know how much money they're making on it and so they focus on that aspect and get rid of the stuff that may be marginally profitable or even may not be all that profitable when you factor in all the true costs so they just want to be focused and I think that's kind of a discipline I think that private equity and corporate buyers bring to the table that maybe the entrepreneurs don't necessarily understand initially they sometimes they have a hard time saying no to new business they just try to figure a way to say yes which makes some great sales people and makes them great and there may be other reasons to do it but it probably does make sense if you're in the oxygen business to do that not do like wheelchairs and canes and walkers and modes and things like that which have a very low margin and a lot of effort to well that's why planning early with someone I mean someone like you can really help facilitate the process because if you just throw stuff against a wall and then say buy me it's going to be a much more drawn out process at the very least you know we try to get in there and understand the business before we bring it to market and we try to to make sure we say okay here's where people are going to like and here's what they're not going to like when they actually get into it and what can you do potentially to to lean one way or the other with what you're doing to grow the things that they're going to like more. Let's turn to your current focus which is obviously infusion and just to set the table here why don't we cover what is infusion and why is it important and if you could weave in maybe some of the recent developments infusion which are really fascinating because I think the field is grown and it's just going to absolutely keep growing but I'll let you talk. I think home infusion started probably in the 90s early 90s where started in many cases with the TPN patients which were patients that required the feeding but they were sort of being kept in the hospital and they didn't need to be there to get the feeding and I think some pharmacy departments and I we I saw the business called NutriShare which Rado Komodo was one of the early guys in infusion when he started it and he was I think and this is probably a lot of these guys started as hospital pharmacists who were mixing the TPNs and other drugs for patients that were in the hospital and said hey these patients don't need to be at home for that or don't need to be in the hospital and they started seeing if they could do it outside the hospital and the hospital didn't necessarily want to keep them on you know because they were probably not the most lucrative patients and they took up you know more space in the hospital so they said they started setting them home and they saw that it worked and I think that's that was really the genesis of how it started and then they started adding you know antibiotics and other therapies TPN and antibiotic were the bread and butter of the business and then you took the other drugs that came with it and then you add a little bit later the specialty drugs started coming out like the Remicades and other drugs and a lot of those were being done in the hospital the home infusion providers were able to show that they could do it safely in the home and the pairs obviously liked a site of care shift that was less costly than a hospital environment and so you saw more of that start to shift out into the home and then as they developed new drugs the drugs are very effective they were drugs that needed to be infused and so they you know that business has expanded and then ultimately you saw the the development of the AICs it was interesting because we tried to do it option care at one point we had sort of freestanding AICs in the market wasn't ready for it yet I don't think in the probably in the 2000s early 2000s but ultimately people kept trying it doing more and more and ultimately the pairs saw hey there's a huge value proposition here for them they pay much less in these environments and the patient likes it because they're closer to home they don't have to walk all the way through a hospital and you know park far away and traverse the whole hospital system to get to their infusion and so and I think the hospitals didn't care as much because they wanted primarily I think the cancer patients the oncology patients which were better you know more lucrative for them so it developed and I think it was one of those cases where it was a cost savings to the system just like home infusion it's good for payers because it's cost saving opportunity as well as ambulatory infusion is a cost saving for the the payers and it's better for the patients because it's more convenient so I think it's one of those types of therapies that really benefits from this different site of care and then you saw actually in like 2000 I think 18 United health care started a real site of care shift where they started promoting that patients couldn't get infused in the hospital more than their initial infusion for some of these biologic drugs and that really started the ball rolling with a lot of the other payers starting to favor ambulatory infusion suite or ambulatory infusion center or the home infusion environment for the care of the patient rather than in the hospital outpatient type setting just to be clear home infusion is great but sometimes a patient's got to be undergoing the infusion process for a number of hours and it can present risks so you have to have clinical staff there it can be a little burdensome to do it in the home for everyone which is why we have the ambulatory infusion centers right? I think you're right there I specifically around the biologic drugs there's potential for adverse I guess reactions so you need to have a nurse there with them in a lot of cases whereas in a lot of home infusion for the core therapies you only have to send out a nurse one time to teach them how to do it or you may not even have to send out a nurse to do it there are certain therapies that require monitoring and those are well suited for the ambulatory infusion center environment because the patient could have some kind of reaction which would need immediate attention and so as we continue and where people can get infusion then of course we've got hospitals historically I think a lot of people don't understand how the reimbursement works and the fact that if you go into some place it might just say it's sane elsewhere on the door it looks like it's in a strip mall but if it's considered a hospital space provider-based you're going to get a hospital bill and that bill is going to be significantly higher even if you can't tell the difference between that and maybe an ambulatory infusion center down the street go ahead and run with that a little bit and the yeah no I think it's I mean I've seen studies that you know say it's multiple times more expensive for the treatment in the hospital I mean I don't have the personal data to support that but I've seen multiple studies that say that and I believe that given the large payers are favoring the AIC in the home infusion environment I think it adds support to that that they they think it's a more cost effective site of care is to put it outside of a hospital or outside of the hospital system that's kind of what you're seeing I think it's clearly a case of a more cost effective place to give the infusion or it's the payers pay less and the patients like it more because it's convenient typically there's another factor I want to touch on that I know you're familiar with and that is let's do a little background on what is a 340b program and how that affects where people get the services that they receive 340b is an interesting program it was set up I believe in some ways to allow for hospitals to pay for care for indigent patients and primarily for their I think pharmaceutical care and it's kind of morphed into being a real profit center for most of the hospitals out there so ultimately they're able to sell the drugs to the patient who who have a payer typically the pay for it and that drug is sold typically at the same price that it's sold to any normal patient but they actually able to buy the drug from the manufacturer under the 340b program at a price that's I've heard it's 30% or more below the cost of what a normal provider would pay for it so that's significant in the pharmaceutical space when you're dealing with you know you could have a $5,000 drug that you're paying $1,500 less for than anyone else so you're making pre-substantial profits on that particular sale and so ultimately you aren't those are making more money and there are companies out there that are doing that for in partnership with hospitals that are doing extremely well and they've also allowed it to expand in a way that they have contract pharmacies that aren't really owned by the hospital but they're able to access that 340b pricing for patients of the hospital so they're able to get that lower drug cost but they're still charging the normal amount the the PBMs or to the payers out there and that creates more profit and typically in those cases the pharmacy or the infusion provider is keeping us a larger amount than they would normally get but not the lion's share of that extra cost savings and that cost savings most of it's going back to the hospital so I've heard of hospitals where pharmacies making a ton of money because it's got the 340b program and it's driving a tremendous amount of profit for the health system overall and some of the big retail pharmacies have gotten into that space to partner with the hospitals and drive those programs as well just yeah I think all the big ones have it they have massive programs that are contract pharmacies for the 340b program and I think it's my understanding is most areas the hospital is one of the biggest employers and has a lot of political power and are able to keep those programs relatively safe for years and everyone's been talking about going away for a long time in defense of the hospitals have a very large budget they lose money on some things they make money on some things the money they make on these infusion programs theoretically applies to keeping their EDs open and doing some other stuff that very few people are going to question but the way the 340b program has evolved has resulted in a lot of skepticism no one's going to cry for the pharmacology is they're making money hand over fist so really it's a tax on them to be honest it's they're the ones who are paying by getting less reimburse or reimbursement for their products for certain segment of the population and they're still making huge profits so I don't think anyone's going to shed a tear for those guys so turning to the ambulatory market what is making it attractive right now well I think people are seeing it's growing there's a couple of reasons why it's growing there's been a shift I think right now people estimate the overall market is like 128 billion or so for all infusion in the hospital in the physician office in the home in the ambulatory infusion setting and it's probably only like 30% or less of that is home infusion and ambulatory infusion combines all creeping from the hospital and other sites of care to those settings so you're seeing growth just from a shift of that market and then that market's growing on the top line substantially as well so I think you're looking at 20% plus growth in that space overall it's also shifting so I think people are seeing hey this is a very fast growing market it's also cost effective for the payers so it's on the right side of the equation in terms of lowering the cost of care so I think they're attracted to that element of it and see it as a sustainable thing it's not a product that they're getting reimbursed in an overly aggressive way so they're not typically like they're pretty fairly compensated at this point but not overly compensated but it's just growing I'd say it's fragmented still there's still quite a few independence out there that are in the marketplace there's a lot of hospitals that are out there that are doing it and they're not necessarily doing it very well we're not really making money on it as much as they could be if it were run differently as my understanding and when I was at option care we bought a number of hospital programs were able to do very well with that they didn't do quite as well with I would say and ultimately I'd say that's driving it as well as that there's opportunities for growth that's both organic and inorganic there's also a lot of drugs that are being created by the pharma companies that are infusible drugs that would be right for that site of care because they're in the areas that are interesting to the private equity guys typically with the chronic nature of those therapies so as you bring on patients they're continuing for years and years on service so you have a lot of chronic health problems and things you have your neurological issues and you have your you know GI issues and you have other issues that are chronic autoimmune issues you're going to need that care and there's going to be new drugs developed and so I think it's all those factors together that are causing people to say hey this is a good space to be in it's growing it's it's on the right side of the the economics of the business it's fragmented and then you see the success of multiple providers in this space that have both grown the business and then exited the business so you've seen multi billion dollar plus exits over the last few years by private equity that have grown businesses and sold them to other private equity firms that have continued the growth so you saw solio sell this year they you know how to successful roll up you saw vital care sell this year you saw by matrix sell last year you're probably seven or eight that have sold in the last two years I think paragon sold to elephants maybe two years ago and that was another successful one so I think when private equity sees the success of others in strong exits of businesses that they've been able to roll up and grow they kind of pile in as well and there's a lot of interest we talk to people every day they'll reach out to us saying they have a thesis in the space and they're very interested and they want to be in the space and why we brought a business to market and we sold early this year and I think we went out to 130 plus potential buyers and you know we ended up signing I think over 65 NDAs we had 30 offers on the initial indications and that's not an uncommon result I don't think in terms of what you see for a decent size deal you're starting to go to an area I wanted to explore and that is if I do have a business right now how do I that's positioned to kind of maximize the value with all the change that's going on at this point never been a better time to sell your business than now I would say in terms of the market we were doing deals in the 2000s and they were probably going for less than half of what they're going for now you see not tremendous number of buyers out there depending on the size of your business there's even more if you're 5 million or plus in EBITDA there's a lot more out there because there's a lot of guys who want to get into a platform there's a close probably close to 20 roll ups going on right now in the space or platform so there's lots of people who want to do add on acquisitions of even smaller ones what I would say is it's like anything with any other business they're looking for a business that is strong and profitable and growing and has good phones you know when I say that I mean like has good personnel has good practices has good referral sources that isn't too concentrated in any one area if they can help it you know they want diversity in the in the pair mix diversity in the therapy mix diversity in the referral mix of the business they want to know there's no sort of like hidden bombs in it so they're going to want to know that there's that they do things the right way and have a compliant organization they're going to understand that they accredited or they obviously they need all the proper licensure and have the proper staff at the proper training it's good if they have a history decent length of time and business and then they look at once they get kind of over those things they want some of the therapies they prefer more I mean there's some that only focus on AICs some that focus home infusion and some that are kind of combos of all of the above in terms of what they're looking for so I would say the typically want to understand your business fully before you go out to sell it that's the other thing is like a lot of times you might think you're making X money you might be making more if you really looked at it the right way might be making more on a trended basis than you are sort of historically you need to look at it the way that a buyer would look at it and potentially you have to recast it for any kind of addbacks that you have you don't want to be learning about your business while you're selling it that's a costly way to do it if I'm in one particular line of business say home infusion would it help me to open an ambulatory infusion center to kind of pretty up the business a little bit and vice versa if I've got a couple AICs should I try to get into the home side or is it just going to complicate things as far as the sale and then obviously the regulations differ depending on the site of service if you're in the home infusion business it's a lot easier to get into the AIC side of the business than it is vice versa because you have all the licenses and contracts and things you need for home infusion are even harder to get I would say than the AIC side of the business and they're kind of grandfathered in and I would definitely say if someone has a home infusion business that doesn't have an ambulatory infusion suite they should consider opening one or more of them and really trying to market those services and those chronic patients I've had clients before you could see their historical performance and they were primarily focused on home infusion for years and they were puttering around a three to five million a revenue and doing well making good money but then when they opened their home and their ambulatory infusion suites the business really exploded because they got they ended up doing more marketing to the the the doctors that were writing those type of referrals and getting business in their home for their home patients as well as for their infusion suites and I saw some of those businesses grow to north of 15 million of revenue in just a few years and really making an attractive business for someone to buy and they do the private equity folks like to see an organic opportunity being able to open up a new center and see it grow and they think that's pretty powerful when someone looks at it and says oh you went from a home infusion business with three five million of revenue and then you opened up two AICs and this the first ones at seven million of revenue the the new ones at three they can kind of see the trend and then they can imagine opening other locations up and seeing that growth trend to continue I do think that's a powerful thing to do and I would say on the AIC side it's a little bit hard to go over to the home infusion side unless you buy one by a home infusion pharmacy that already has some contracts in place and has all the lights in turn the other personnel that are needed for that business but they do like to see just opening up new AICs you'd probably be best suited by just looking for new locations to add another AIC to rather than trying to get into home and line of business in that case for the inventory infusion suite side which is where the pharmacy would do those are typically limited to payers where they have a contract already and they're primarily commercial payers that you're going to be doing it for in those with the home infusion side because you're not able to do the the Medicare typically you can apply that to the benefit there so it's a little different model but it's virtually the same and the fact that you don't need to write nurse practitioner on site either you just need a nurse typically what about the other actor here the big actor which is the hospitals if I've got a hospital I hear all this site neutral stuff people taking shots at the 340B programs and I want to maybe focus on my core business here and I kind of see that it's going to be hard to maintain my operations at a level where it's really worthwhile what do I do how do I get out if I want to get out I think there's a great opportunity to get out at a very strong price if you wanted to sell those assets off ultimately for a hospital that's typically a decision they can make and then they can always change their mind ten years later because it's you don't have nine competes that last forever but I'd say they may not ever want to get back into it or they might but ultimately there is a market out there I think there's a lot of potential buyers that would want to buy both home infusion assets and ambulatory infusion center assets from a hospital to expand their networks we did those deals and oxygen care and at Walgreens when I was there and we loved them they were good deals for us from what I've seen of hospitals and health systems a lot of times they tend to pick up the phone and call some actors they know that are local but from the discussion we've had I'm kind of led to believe those assets might be attractive even if people weren't in the market at the present if they can be negotiated under the right terms yeah I would highly recommend hiring someone like me to be honest to go out and to package it up like you would any other business and to go out and find out who the ultimate highest bidder would be because anytime you're doing sort of a one-off transaction you're going to do less well than if you run a full process and go out and talk to all the likely buyers and find out who really wants it the most and it can change from deal to deal you can have I've seen on deals one deal that the top bidder is this company and another and the bottom bidder is someone you think would be a strong bidder and other deals it goes the other way around so it's one of those where it really is market by market that these people need different deals and there's a lot of other buyers that are not that they're out there looking but he may not have heard of them so the more competition the better for a sales process you know let the highest bidder really win or the you don't have to choose the highest bidder but at least you you know that this is the max and here's this buyer that I want to go with and you can always choose the lower bid if you want or push the other buyer up if they're really wanted but and then you have a lot more leverage during the rest of the negotiation as well where you're getting more market terms versus kind of a one off and then I would say typically like individual I don't usually see that buyers that are local are great buyers because they're typically cheaper than the guys who are out private equity guys and the corporate buyers that are doing it you know all the time let's cover what the sale process looks like because I think a lot of people you have tremendous experience and can get very granular and do a lot of people it's a black box because they're not doing it all the time so let's take it through you know what you do and how the process works so what we do is when we sign up a client we we send them a a couple page information requests list and we open up a virtual data room for them to upload information into and the first initial informational list we send them is just the stuff we really need to put up a book together a sim and so what we do is we then will analyze their you know we'll ask them for all this information and they'll include the basics about the business their financials typically we'll just get a download of the financial data we'll get their billing data so that we can cut and understand it and understand what like the pair mixes and what the therapy mixes and what the referral mixes in terms of who the top foreign sources are and and so forth and we'll blind all that so we won't we won't necessarily tell people I mean obviously we won't tell people who anyone's referrals versus our board at least they can see a you know 10% of your business comes from this one source or or 20 or 40 or is it just very low concentration we'll work we'll take all that information we'll put that book together at the same time once we kind of get enough information for that first one we'll give a second list which will be all the stuff that people want to see which will be like all the payer contracts a bunch of information on their insurances in terms of how their liability insurance and so forth and there'll be a lot of information on their HR benefits and everything that the due diligence will entail and typically it's it can be a gig or more of data we fit anywhere from a gig to 10 gigs of data that people end up uploading so once we get all that information we've kind of get that going before we're done with the book but we'll give you a copy of the book you look at it you give us your comments we'll update it make sure it's good look at the make sure we come through the financial projection with you and then we'll get that approved we'll get a teaser set and then we'll get you a buyer list of saying here's the buyers that we typically go out to and could be up to 130 150 names once we get your approval on that list we'll go out and shoot out the teasers to all those parties and then start processing the NDA civil war within attorney like you to get those processed in the form that everyone wants now that usually takes a couple weeks and then ultimately a couple weeks later we'll ask for indications of interest and say okay and we may have conversations with various parties along the way to try to help them understand the business but we'll not have them to speak with the seller yet because we don't want to waste the time of the seller until we kind of get an indication of what their price ranges and once we get those initial indications in we'll go through them with the seller and say okay look at these who do you like who do you not like we'll try to work focus up that they want to kind of move up the line and then they'll pick number anywhere from six to ten parties to actually meet with and it can be less it could be three we'll meet with a couple of those parties to see if there's an increase in fit from a culture perspective as well as to to answer any questions each party has and then with that group typically we'll open up a smaller subset a little bit more data to them so they can do a little bit more work on get a little more comfort around their bed and then we'll ask for like a second letter of intent stage type bid and ultimately we'll say okay get us a letter of intent and we'll get our letters of intent and we'll do the same thing again just kind of review it with the seller the seller will pick one or more of those parties and we'll try to get one or more of those parties to go to the next level which would be full due diligence with including access to the full data room that we've worked with them to put together with the seller so the prior period and then it's kind of off the races you basically managing the due diligence process making sure that the buyers are getting the information that they need to do their analysis that we're explaining things to them are working with the sellers to understand any issues that arise which is as you know always do working with health care counsel at times like Eric as we've done before where we'd say okay here's an issue that we want to kind of discuss with you before we discuss with the other side how do we characterize it properly just to try to get in front of any kind of problems that might arise there's been an attorney hired at some point in this process there's a purchase agreement that typically we get a draft of that's typically comes a couple weeks after we start the due diligence it's usually the after the first month once the QB work is mostly done and at that stage we're working with the attorney to help review it from a business perspective and the attorney is obviously reviewing it from all perspectives we're giving our two cents on the deal and saying what we think and then we're all working to make sure that the terms are fair that they're consistent with it but everyone at a standard deal that type would be in getting through the due diligence process then getting to assigning and then typically as you know in this business there's typically a sign to close period where there's certain contracts that need to be either consented to or assigned there might be licensure that needs to be approved and then we're working with the seller on the buyer to make sure that all those closing conditions are fulfilled and helping to keep that on track and then getting through to the closing actually itself as you know it's very anti-climactic process you work very very hard and then all of a sudden they're like up we're closed used to be we'd go to the place we'd have our everything with us it'd be more of a big deal now everything seems to just close or sign virtually but that's about it and typically the wires go out and everyone's happy full well remember the days of the conference rooms and those accordion setups and oh yeah don't miss those but what are we looking at for timeline I mean a lot of sellers they want to know how long until I get my money to be honest depends on how long it takes the seller to get the information together that's requested typically I always say it's between six and nine months process total from beginning to end including the time which the month or so it could be a month or two months between sign and close like you know California for instance takes 60 days to approve a pharmacy license so that's kind of your longest poll in the tent for that one it can take less time depending on how quickly people work but I always say that's kind of like a safe assumption from beginning to end from the when you first start with us to the end is six to nine months ultimately I'd say that the thing that takes the longest is if the seller just doesn't get their information together quickly they can't put their fingers on contracts of typically the financials they have pretty well but like the billing data is sometimes hard to access and they have to realize that the buyers are going to really get in-depth on the billing data and they're going to want to understand how it ties to the financials and how the financials tie to the bank statements and the bank statements reflect the cash that's actually coming in and so they're going to want to really tie all that out tightly that's kind of the hardest stuff to do but ultimately we try to get ahead of that so we know that we have all the data that we need and that it ties out but it will make sense and we have folks on our team to do diligence for option care for years and to do diligence for Walgreens for years that are experts at the billing and the reimbursement data if you're advising sellers give me one or more of the biggest mistakes that you've seen made that if someone knew them early they could really avoid trouble one is just keep good records right keep all your contracts you do sign contracts every day we have clients that the 30-year-old business is that have contracts to go back to the beginning but they should try to keep a file with all their contracts in it even just scan them and upload them make sure they're complete try to check and see if they have signatures on everything because a lot of times you'll see a lot of contracts that have never really been fully executed they are contracts of the business but they've never gotten the counter signature on it right we get a signature page with the seller's signature on it but not the other party from the contract or we get a lot of amendments and things that are just like okay you have the fifth amendment but where's the original contract and the first four and then whatever has come since then as you know the attorneys want to see kind of the complete paperwork file of everything you can get all that kind of pulled together that's helpful I think from just a basic business perspective they should have a good accountant that they work with so that they have their financials and good order that they're able to understand the difference between a cash basis of accounting and an accrual basis of accounting and what the business a lot of times sellers still show their business on a cash basis but if they can understand where they are on an accrual basis or even keep their books on an accrual basis and have an account that actually can help understand and explain that it's helpful people will give you an addback for sort of preparation for your business in terms of getting it ready for sale so some percent of their accounting bill could be kind of what characterized as a prep for the sale of the business versus ongoing sort of requirements of the business and I think that would be helpful to have good financials I think their billing system is important I've had clients that have billing systems that are one of three people using it in the world and it does it's very difficult to get data out of it and it makes it a lot very much harder to do a deal by having like sort of a non-standard billing system that you use that nobody else uses and not having like years of data available you might think it's not important but the buyers they want to see a lot of data and they want to be able to cut and slice it various ways to understand your trends of your business and where it's going and where it's been so the better your data is the easier it'll be as well and then it's a kind of compliance issues if you're accredited that's great keep that up accreditation is a good seal of approval running a good compliant organization is important for people they want to make sure they're not buying something that they're going to step into a mess it's also helpful I think if they look at it and they can see a normal org chart it's not like one person then all roads lead right to the top all the time and it's there's no people with responsibility in the business other than the owner and they get the kids people a little bit nervous I think people want to understand they're buying an organization that has some strength to the bench and not just one man show type of thing as we wrap up any last words well I think the other thing is to get a great attorney like Eric who knows how to both do the M&A side but also understands the healthcare side because those are the issues that are going to cause you trouble during the deal and if you have any of those arise you want to have an error to answer those questions and to characterize things properly because it's very nuanced issue and you have only a handful of attorneys that really understand both healthcare and M&A I think extremely well well Rob thank you for your time it's great having you and all the best to you and to triangle healthcare advisors moving forward thanks Eric thank you for joining the bright minds in healthcare delivery podcast for more information please visit blankroom.com if you like this episode be sure to subscribe to our show on Apple podcast or wherever you get your podcasts and as always thank you for listening the insights and views presented on the bright minds in healthcare delivery podcast are for general information purposes only and should not be taken as legal advice or opinion for any individual case or situation the information presented is not a substitute for consulting with an attorney nor does tuning into this podcast constitute an attorney-client relationship of any kind to connect with a team of attorneys that understand your business your needs and priorities and the unique risks you fix visit us at blankroom.com