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Why Have Buyers Signed On With HPS?

Buyers have chosen to work with HPS because they trust that the practice profiles will be prepared to Wall Street standards. If a buyer needs 100 metrics to evaluate a practice, HPS provides 200. This thorough preparation means buyers will not need to conduct additional due diligence on the practice. The practice profile is “deal ready” which means that actionable offers can be received by the seller almost immediately after the profile is posted on the HPS platform.  

 

HPS has signed a “captive audience” of buyers who are confident that practice profiles will be comprehensive and "deal ready". This assurance is why they have joined the HPS platform. HPS has also recruited M&A professionals from Goldman Sachs and other major firms to ensure the highest quality in practice profile preparation. The quality of preparedness and thoroughness of the profiles are key reasons why buyers trust and rely on the HPS platform.

HPS Has A Captive Audience Of Buyers Who Have Signed Onto Their Platform To Review Practice Profiles Prepared By HPS. The Buyers Know That The Profiles Will Be Deal Ready And Not In Need Of Additional Due Diligence Which Is Why They Have Signed Up For The Platform.

Will Wall Street Buyers Review Profiles Prepared By Groups Other Than HPS?

Some but few. HPS is not a broker but on Main Street practices are normally represented by some kind of broker. If a Wall Street buyer requires 100 metrics for evaluation, a Main Street broker or their preparation team may provide 40. A Wall Street buyer ABSOLUTELY WILL NOT chase a broker and a practice for the additional 60 metrics which is the reason why Wall Street level buyers are very selective about the groups whose practice profiles they will review. 

What Kind Of Offers Are Received On The HPS Platform?

Offers vary widely in terms of multiples and acquisition structures. Some practices may prefer a quick sale, and there are buyers available for this approach at specific multiples. A practice may also want to show growth in EBITDA so they will receive higher multiples (applied to higher EBITDA figures) when they are ready to sell.  Therefore, having a well-prepared practice profile "on the shelf" is important, as buyers frequently come to HPS seeking practices ready for sale.

 

For example, on the private equity side, private equity firms raise funds to invest in healthcare and face penalties and interest if they don't commit the capital within a set timeframe. As a result, private equity firms often contact HPS under pressure (having to place capital), which can lead to significantly higher offers for practices, as they want to avoid returning the funds to their original sources. The practices that benefit have completed profiles “on the shelf” that can take advantage of this and other “emergency” scenarios. 

Two General Offer Groups Have Emerged

There are many buyers on the HPS platform and there are many different multiples and many different acquisition structures that are possible.  Two general "offer themes" have, however emerged

For Those Practice That Want A Quick Exit.

For Doctors looking to sell quickly (within a few months), there are buyers who will pay 1x collections (gross revenue).  The revenue figure is established by averaging gross collections over the past 3 years.  The due diligence and practice preparation is limited and the buyers are most interested in the size of the practice's patient base.  

For Those Practices That Want A Higher Multiple

If the Doctor is willing to stay for 12 or more months and is willing to grow their practice during this time, multiples of EBITDA are available that will equate to 3x collections (+/-) for most practices.  These practices will have their practice profiles prepared by HPS and will have their practice properly positioned prior to being placed on the HPS platform.  

HPS Is Changing The Industry

HPS Offers A Wall Street Level Of Preparedness To All Practices

Previously, this level of preparedness was reserved for very large deals, typically valued at $20 to $30 million or more. HPS is revolutionizing the industry by making this high standard of readiness accessible to all practices that are referred to them, regardless of their revenue or EBITDA size. As a result, HPS is providing practices with access to thousands of buyers they might not otherwise reach.

Inverting The Process

The HPS model is different because it ensures that a buyer receives all the due diligence (the completed practice profile) prior to issuing a Letter of Intent (LOI) or term sheet. A buyer making an offer on a practice prepared by HPS is less likely to manipulate EBITDA, as the practice is already "deal-ready" and requires no further due diligence. This is an important feature because on Main Street, practices often do not receive the price they expect because the due diligence conducted (post LOI) finds practice defects or reduces EBITDA.

HPS Is Not A Broker And Does Not Require An Exclusive

The HPS model is different because it ensures that a buyer receives all the due diligence (the completed practice profile) prior to issuing a Letter of Intent (LOI) or term sheet. A buyer making an offer on a practice prepared by HPS is less likely to manipulate EBITDA, as the practice is already "deal-ready" and requires no further due diligence. This is an important feature because on Main Street, practices often do not receive the price they expect because the due diligence conducted (post LOI) finds practice defects or reduces EBITDA.

Buyers On The HPS Platform Present With Many Different Acquistion Structures

The variety of acquisition structures offered by buyers on the HPS platform is as important, for many practices, as the multiple received. 

The HPS Platform Is Unique

Sellers establish their sale conditions, and HPS makes them clear to potential buyers. Only buyers who agree to these conditions will place bids on the practice. Once the practice profile is complete, it is listed anonymously on the HPS platform, where over 1,200 buyers can review it and submit offers if interested. A referring source will only recommend a practice to HPS if they are confident it can attract Wall Street-level interest. The HPS profile uniquely provides both a current snapshot of the practice and a growth plan to help the buyer achieve their desired ROI. A buyer’s offer reflects both the current value of the practice as well as the potential of the practice (as evidenced by the growth plan). All offers are displayed on the seller’s profile, which is protected by a username and password.

Give The Buyers What THEY WANT Not What You Think That They Should Want

This statement may seem obvious, but particularly in the healthcare field, it often isn't. A doctor’s life’s work is their practice, and many wonder, "Why am I not getting a fair price for my exceptional practice?" The answer is straightforward: you need to move from Main Street to Wall Street and you need to offer buyers what they are looking for, not just what you believe they should want. It really is that simple. Your referring source is in direct contact with the buyers and can guide you through the process. 

Without This Program, The Outlook For Selling Your Practice Is Not Great

It is estimated that 10-20% of healthcare practices go up for sale each year. Of those practices, it is estimated that only 5% of those practices will actually sell for “real money”. 60-70% of practices for sale just go out of business with no sale. The remaining 25-35% settle for a “work out” type of sales price that does not do justice (in terms of price paid) for a practice that the doctor spent their life creating. 


If you are invited to join this program, you participate to be one of the 5% of practices that are sold for real money. 

Increasing The Profitability Of The Practice

Your referring source may advise you to increase your EBITDA, but this isn't always necessary for every practice. It depends on the amount the practice owner needs/wants to receive to consummate the sale. With some effort, a practice currently with no value on Wall Street can quickly be transformed into one worth $4-6 million or potentially much more. In fact, some practices with current valuations in the $3-4 million range could be worth $40 million or more with simple adjustments. Expanding a practice (increasing EBITDA) to achieve a higher sale price should always be considered.

Participation Can Be About Selling Quickly But It Can Also Be About Positioning Your Practice

You can sell quickly if you desire or you can increase the value of your practice while simultaneously preparing your practice profile through HPS. A properly prepared profile can be presented to Wall Street buyers at any time. This allows you to receive offers (literally) within weeks of you making the decision to sell. A great luxury to have. 

A Doctor Needs To Be Prepared To Sell Even If They Do Not Want To Sell Immediately

A doctor's practice should be prepared for a Wall Street-level sale, just like many tech companies are. It needs to be a "ready-to-go package on the store shelf," so that when the decision to sell is made (whenever that is), the practice can be reviewed and can quickly (within weeks) receive actionable offers (at Wall Street multiples). 

Success Depends On Who You Know

Your referring source will have strong connections in the Wall Street space, and HPS has extensive industry contacts, having signed over 1,200 buyers. Networking plays a critical role, and with advisors that are well-connected with Wall Street healthcare buyers, you should receive an offer that is much higher than you can receive elsewhere and one that is potentially lifechanging. Your referring source can provide projections in terms of what your practice can sell for on the Wall Street side. 

Participate In A Rollup If Possible

Wall Street buyers often times prefer rollups, whether large or small. Work with your referring source to explore the possibility of selling a portion of your practice now and then considering a rollup strategy for the remaining part, which could yield an even higher multiple.

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