The mental and behavioral health industry has risen to prominence in recent years. This is showcased by the interest of private acuity firms in buying such businesses. A reputable study found that private acuity firms are expanding their influence in the behavioral health market with 6% of business ownership. However, buying a business in a relatively new market has unique challenges. This blog is an effort to comprehensively answer how to buy a mental and behavioral health company.
Do you face any confusion when buying a behavioral health business? You can now easily seek the help of buying experts at Strategique Partners by registering as a buyer here.
Steps to Ensure a Smooth Buying Journey
Buying a behavioral health business demands that you possess the know-how of almost everything that matters in this sector, from regulatory compliances of each state to niche-specific marketing. You will need to understand the various treatment programs alongside the staffing requirements for individual programs. Therefore, it is important to move in an organized manner. The following are the steps you will need to follow:
1. Survey the Market Landscape
The primary way to enter a sector is to understand the market. In analyzing the market, it is very important to rely on updated data that gives you a fair idea of the current trends. Though generally, we can say that the market is expanding, the specific nuances about the particular market of a place are not accounted for in that analysis. For that, you need to do the following:
Demand for Individual Services
You need to analyze the demographic data regarding the demand for individual services like:
- Intensive Outpatient Programs (IOP)
- Inpatient Services
- Group Therapy Practice
- Individual Counselling Services
- Private Therapy Practice
Establishing the services that are in demand is very important. Strategique Partners’ behavioral health real estate services can help you locate yourself strategically.
State Regulations
Each state has its own unique set of regulatory requirements that a behavioral health business has to fulfill. Some places have stricter requirements than others. However, the common thing is that noncompliance almost everywhere results in losses. So, you must understand a market’s licensing and regulatory requirements before buying a business.
2. Define Your Buying Objectives
Sometimes, a market full of opportunities can confuse you. There may be several buying options. However, not every option will suit your preferences. You must instead define the set of buying goals before setting out to buy. This implies that you also know the nature of each type of behavioral health business and what it offers. You can decide on the following to organize your objectives:
Nature of Behavioral Health Business
As mentioned above, a behavioral health business can offer many programs such as IOP, inpatient treatment, detox treatment, or methadone-assisted treatment (MAT). The following lines explain how the nature of the business can influence the outcomes:
- An inpatient facility requires 24/7 care.
- Outpatient facilities will be less demanding for you.
- Opening an IOP can help you achieve the ease of an outpatient facility but with the productivity ratio of an inpatient facility.
- MAT is specific for substance abuse disorder.
- Telehealth therapy allows the virtual presence of your clients.
Understanding which nature of the business requires what adjustments and permits what outcomes is important. You can better understand the requirements and outcomes of individual programs from program development and management experts.
Other Considerations in Attaining Desired Buying Objectives
Like the nature of the business, there are several other key factors that you should consider and decide about when buying a business. The following is a list of such considerations:
- Location
- Market Position
- Brand Reputation
- Size
- Online Presence
These factors decide a business’s future performance. So, define your buying objectives based on these aspects of the business.
3. Understand the Value of the Business
Once you have charted your objectives and expectations, you can shortlist buying options that align with your goals. However, even then, only some of these options are available. You should only consider the businesses valued very highly in the market. The financial valuation of a business will help you find the justified price of a business.
Factors Deciding the Value
As someone with little knowledge of the sector, you may be unsure about the importance of healthcare business valuation. There is a set of factors that you can analyze in a business to know the actual worth of it. These include:
- Payment Sources
- Operational Efficiency
- Market Reputation
- Branding and Marketing
- Client Base
For its financial valuation services, Strategique Partners considers only those factors which make a business productive. Therefore, you can consult behavioral health valuation experts to ensure you buy a valuable business.
4. Negotiations with the Seller
When you have analyzed a buying option for its market standing, alignment with your business goals, and worth, you are now on the right path to engaging with the owner of the business of your interest. You will try to convince the seller to buy from you on favorable terms. This will need a good negotiation and incentivization mechanism alongside trust-building measures.
Terms Requiring Negotiations
You will be negotiating the following with the seller:
- Favourable Purchase Price
- Payment Plan
- Terms and Conditions of Purchase
- Post-sale Agreements
You need exceptional negotiating skills and a knowledge of the vulnerable areas you may have after buying the business. Therefore, it is best in your favor to have a behavioral health buying expert at your end who you can consult.
5. Integration and Transition Planning
After convincing the seller on agreeable terms, you can move forward to plan wisely for the integration and transition. This is particularly one of the most important steps of selling and buying a behavioral health business because you need continuity and smoothness in business operations. Clients can be retained when assured that the quality of care and healthcare standards are the same.
Elements of Integration and Transition
Certain aspects of a business are sensitive to any change in ownership. These include:
- Clients
- Referral Sources
- Day-to-day Operations
Therefore, you must ensure that processes continue smoothly so that these aspects do not get disrupted. You can also use our operational and outcome management services.
6. Make Use of Strategique Partners M&A Expertise to Buy Successfully
Buying, negotiating, and integrating a business successfully are all part and parcel of this journey. They require a lot of planning and analysis, which is almost impossible without prior experience or comprehensive buying knowledge in this field. However, this problem is addressed by the help offered by mergers and acquisitions experts in the behavioral health sector. Strategique Partners is the leading behavioral health M&A expert. It offers general M&A consultation services and M&A sell-side services. However, our main vision is to encourage businesses to operate in this field and expand the behavioral health sector. Therefore, our natural slant is to make business productive and fruitful. This is why you can get the greatest help from us in buy-side M&A advisory.
FAQs Regarding the Buying of a Mental and Behavioral Health Company
We have answered commonly asked questions regarding the buying process of a mental and behavioral health company in the following lines:
How Much Should I Pay for a Behavioral Health Company?
When buying a company, you should pay according to its financial valuation done by a behavioral health market expert. The valuation process can help you determine the right purchase price for the business.
What Are the Risks Involved in Buying a Behavioral Health Facility?
Risks are involved in buying a behavioral health facility. Core staff may leave, disrupting the operations of the business. Seeing the core staff leave, many clients may be impacted negatively. The standards and results in treatment care may drop. A drop in results may lead to license terminations and penalties.
What Should I Consider When Buying a Mental Health or Behavioral Health Facility?
You should consider the business’s current standing in the market, the market landscape itself, the treatment programs on offer, and the existing clientele of the company you are about to buy.
Related Resources:
- How a Mental Health Marketing Agency Can Skyrocket Your Practice in 2024
- Companies That Buy Mental Health Practices: A Comprehensive Guide to Selling
- Understanding How to Start a Mental Health Business in Today’s World
- Behavioral Health Business For Sale: 7 Expert Tips Before Buying One
- Step-by-Step Guide To Selling Your Mental Health Business
- What to Look for When Buying a Psychology Practice
- Who Wants to Buy My Behavioral Health Practice: Maximize Profit
- 10 Simple Steps to Speed Up the Sale of Your Addiction Treatment Center
- How to Sell Your Psychiatry Practice: Understanding the Process
From Author
Buying a behavioral health or mental health business requires greater due diligence because as a buyer, you are putting all your investments and hoping that the newly acquired business will work. You need it to work according to your spending and the envisioned goals. There are ways to ensure that. There are ways to limit the costs of buying. There are ways to ensure that the financial data about the business to be bought is accurate. You can also check whether the financial projections made by the seller are going to work or not. You can make an impartial and accurate analysis of the programs, operations as well as staff. You can similarly have access to digital platforms to check a company for its licensing and credentials. Today, understanding the position of a company in the market and its reputation among the clients are the easiest things to check for. You only need to learn what aspects of behavioral health business require your examination. This is something that experts like us help you with. Therefore, join hands with buying experts at Strategique Partners to ensure you buy the right behavioral health business.