5 Proven Strategies for Successful Behavioral Health Mergers & Acquisitions

 

 

Since 2017, behavioral health business mergers and acquisitions have attracted the attention of private equity (PE) firms, with 77% of transactions carried out by PE and only 23% by strategic buyers. This fact shows how effective M&A deals have become in achieving the following: 

• Overall Company Growth
• Financial Sustainability
• Acquisition of New Capabilities
• Market Presence Expansion 

M&A activity has proved its mantle. Yet many deals fail to deliver the desired outcomes. This blog will teach you the most effective strategies for successful behavioral health M&A. 

Are you looking for growth opportunities through behavioral health M&A? Learn more about making M&A transactions and strategies with Strategique Partners.

Understanding Mergers and Acquisitions in Behavioral Healthcare

The mergers and acquisitions (M&A) process starts with identifying objectives and target companies. You require finding out if the target company aligns with your goals. The following process is followed after finding the target company:

• Impartial Financial Valuation
• Negotiations for the Purchase Price
• Deal Structuring in Terms of Payment Methods and Legal Agreements
• Deal Closing
• Integration of the Merged/Acquired Entities 

Stakeholders in M&A transactions must employ meticulous strategies for each of the steps.

Do You Require the Help of a Behavioral Health M&A Consultant?

Behavioral health M&A consultants prove very helpful in highly regulated industries like the behavioral health industry. Even if you possess expertise in navigating regulations, you will find their help in finding your potential merging and acquiring options. 

If you are looking for a behavioral health M&A consultant to help you with M&A transactions, Strategique Partners is a good choice with proven results.

Top 5 Strategies To Maximize Outcomes in Behavioral Health Mergers & Acquisitions

Behavioral health M&A deals can have unwanted consequences if they are ill-targeted. This is why it is important to plan comprehensively before entering a deal of this magnitude. Despite its challenges, behavioral health offers great growth and sustainability potential. The core factors contributing to propelling M&A activity are dependence on vertical integration and technology growth. Strategique Partners views good M&A strategies as crucial for company development.

1. Identification of M&A Goals

An addiction treatment center or a mental health business can have M&A goals as varying as the following list shows:

• Service Line Expansion
• Shedding of Less Significant Services
• Geographical Diversification
• Strategic Expansion for Greater Client Intake
• Market Consolidation
• Financial Optimization
• New Market Exploration

This diverse set of goals requires distinctive decision-making and planning. A strategy that works for service line expansion is not apt for shedding non-core services. M&A consultation experts can clarify your confusion about M&A goals.

2. M&A Landscape and Opportunity Assessment

Once you are clear about your M&A strategic objectives, you are ready to embark on the journey of exploring the market. You must assess market threats and opportunities because deciding according to market trends is best. This perusal will help you in figuring out the following:

1. Acquisition Targets
2. Potential Synergizing Opportunities
3. Partners Aligning With Your M&A Goals
4. Potential Disharmonizing Factors

This aids in overall planning for your M&A transactions. You can assess the market on your own or seek the help of market research and feasibility services from experts like us.

3. Development of Negotiation and Valuation Strategy and Team

After identifying an acquisition target, you must strategize for impartial valuation and negotiations. You can form a valuation strategy from the following mechanisms:

• Asset-based Valuation
• Competitive Analysis 
• Cash Flow Analysis
• Earning Potential
• Revenue Projections

Similarly, you require a team for effective negotiations for terms favorable for all parties. With professional help, you can maximize the deal’s value. Financial valuation services from Strategique Partners are an option.

4. Coherent Integration and Post-Merger Planning

You also need an integration strategy that takes into account business operations post-merger. Come up with planning for the following integration areas individually:

1. Clinical Operations
2. Financing
3. Human Resource Management
4. Infrastructure and Equipment
5. Marketing

Integrating the above-mentioned functional areas can help you upscale clinical services, administrative processes, and organizational structure. Our operational and program management services can help you implement these strategies.

5. Consideration of All the Legal and Regulatory Requirements

Due diligence in behavioral health M&A transactions means carefully analyzing potential risks and liabilities. In the highly regulated behavioral health market, factors like regulatory compliance and accreditations are part of mitigating the risks and liabilities. You should check the target organization for these before the deal closes. 

Do you need to gain expertise in legal and regulatory matters of your business? You can easily get help from our licensing, regulatory, and accreditation support. 

Engage Stakeholders for Successful M&A Deals with Strategique Partners

As mentioned at the start, the reason for such high ratios of M&A deal failures is a lack of professional planning. When planning well-informed strategies, it is valuable to seek professional guidance. The help of experts like Strategique Partners can prove effective. We bring value to our mergers and acquisitions services through:

• Rigorous Market Analysis
• Engagement with Buying and Selling Opportunities
• Closing Countless Successful M&A Deals

In our mergers and acquisitions, we offer buy-side M&A advisory and sell-side M&A advisory

Are you looking for a potential growth opportunity through merging and acquiring a buying option? Fill out our buyer’s profile form here.

FAQs Regarding Behavioral Health Mergers & Acquisitions

We believe it is very important for you as stakeholders in your behavioral health businesses to thoroughly understand the mergers and acquisitions you intend to carry out. Therefore, we have addressed some commonly held questions that you might come across in the following lines:

What Are the Tips for Successful Mergers and Acquisitions?

Conducting due diligence is one of the key tips for successful mergers and acquisitions. Secondly, you should clearly define your goals for M&A deals. You should research the market based on your goals and select a company that is doing well and aligns with your future aims. Legal and regulatory compliance is of prime importance. 

What Are Some Post-acquisition Priorities and Strategies in an Organization?

The first and foremost post-merger priority is to ensure the smooth integration of functional aspects of the acquired company. You should also address employee retention, revenue earnings, deals, and product deliverables. However, if the merging model is operational independence, you need to establish clarity about what clinical programs, operational practices, and staff will run independently. 

What Is the Best Way to Manage People After an Acquisition?

You must retain valuable professionals because they are the key to attracting clients to behavioral health businesses. However, you will also need to analyze the performance of the management team. If they are performing well already, you need no huge change in the team. If there is some minor issue that you need them to address, you can communicate your expectations clearly at the outset. If the issue persists, you can manage them more strictly without terminating their contract.