As the pandemic continues to have its effect on deals, Amedisys Vice President - Mergers & Acquisitions Kris Novak says much of diligence remains essentially the same. However, there's been increased focus on understanding the integration and cultural risks.
"If things are priced to perfection, which of course that's valuation but that's also the terms of the deal as well and process and how it's being run, we want to identify those cultural and integration pieces to make sure that we've got clear runway around our budgeting and our modeling so that we can continue to stay really disciplined post-closing," Novak says. "If we don't integrate it appropriately and we don't get what we expect out of it even really quickly, given that it's priced to perfection, we're going to have some issues from a return to our shareholders."
That's meant working with an elevated discipline to dig deeper, in part through the inclusion of their operations team, budgeting from a bottom-up approach, to check the deal guys. It also means looking closely at the differences in workflows, job roles, pay methodology, EMR system and determining what work that could create on a day in and day out basis.
"If we're going to go in and change a lot of these pieces, given we're a people-driven business, we would expect that on a number of transactions" Novak says. "But if we're priced to perfection, we've got to hit the ground running and we can't miss, whereas if it's a couple turns less then we know we're going to go do these things with the organization, to the organization, in order to get them into our model and we have the time to do that and still reach the minimum level of return or higher than what our board is expecting, what our shareholders are shareholders are expecting"
Probo Medical Chief Strategy Officer Jay Burkhardt says the push to get to get deals done through the pandemic and not have deals get too fatigued, especially when it's a competitive process, has put an emphasis on getting more done earlier. That means a focus early into specific areas that his firm believes are going to be points of question that they want to understand further.
On the integration side, given the level of activity, Burkhardt says there's been a lot of focus on really homing in on where the points of synergy are and where his firm can really help the business that they're buying — where they can help that management team that they're bringing in to maximize their opportunity.
"We bring certain resources to bear and that's oftentimes why they're interested in joining our family," Burkhardt says. "And we're similarly looking to those acquisition targets to learn things from their business that are going to help us in our legacy operation. So, we've really focused, from an integration standpoint, on making sure we prioritize those, making sure we have some good action plans and accountability around those, and set some clear measurables of what we're trying to achieve there."
Novak and Burkhardt, along with Waller Lansden Dortch & Davis LLP's Tyson Bickley and LBMC's Lisa Nix, take a deep dive into how a public company and a PE-backed business have adapted their acquisition strategies in this new normal. Hit play on the video above to catch the full discussion.
