The Current Merger/Acquisition Frenzy: Can It Increase Your ‘Fortune’?
Define fortune on your own terms
By Marc Anderson
Mergers and acquisitions (M&A) is a broad term utilized to define a transaction between two separate entities.
A “merger” is traditionally defined as the combination of two organizations in a cashless event, whereas an “acquisition” typically means one entity purchases some or all of another. In practice, these terms get used interchangeably, along with recapitalization, investment, partnership, affiliation, and others.
You’d be forgiven for losing track of the M&A trends in physical therapy over the past few years. Despite the uncertainty inherent in running a practice during the COVID-19 pandemic, M&A in this sector continued at a feverish pace, with valuations for groups large and small continuing at all-time highs.
What gives? The importance of physical therapy, a sector worth over $40 billion, has never been as prominent as it is today, with long-term, sustainable growth supported by strong tailwinds: an increasingly active and aging population requiring more rehabilitative and preventative care, increasing focus on non-pharmacologic pain management, decreasing barriers to patient access, and proven clinical efficacy in many cases versus surgery, among other factors.
What should an independent practice do to capitalize on these tailwinds and expected growth? What are your strategic options? Should you buy, sell, merge, or stay the course? It depends…
According to an old proverb, “fortune favors the bold,” but “fortune favors the prepared” might be more apt. Each strategic path has its own risks and rewards and requires unique preparation to maximize “fortune.” And maybe a transaction isn’t currently the right strategic move. Regardless, every practice owner would be wise to periodically take an honest assessment of where their career is, what their short- and long-term goals are, and whether they have a plan to stay focused on those goals.
Marc Anderson is the founder and managing director of The Belay Group, a boutique investment bank focused on advisory to companies in the health care sector. He can be reached at email@example.com.