HomeCareCon Key Takeaways: M&A Strategies for Home Care Success
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Erin Cahill: And Boyton right.
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Rachel Boynton: Yeah, yeah.
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Erin Cahill: All right.
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Erin Cahill: Welcome to CareSmartz360 On Air, a home care podcast. I’m Erin Cahill, an account executive at Caresmartz. Mergers and acquisitions(M&A) can be a crucial strategy for home care agencies, seeking to expand their services, increase market share, and improve overall success. However, navigating the complexities of M&A Transactions can be a daunting task, especially for those without prior experience.
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Erin Cahill: A successful M&A strategy requires careful planning, preparation, and execution. One of the key considerations is managing emotional stress which can arise from the uncertainty and change that comes with M&A Deals.
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Erin Cahill: Agencies must be prepared to address the emotional impact on employees, seniors, and other stakeholders to ensure a smooth transition.
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Erin Cahill: Another critical aspect is establishing an effective M&A team comprising individuals with the necessary expertise and experience to navigate the deal process. This team should be able to identify potential pitfalls and develop strategies to mitigate them.
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Erin Cahill: to arrive at favorable deal terms, negotiate fair prices, address regulatory compliance, and ensure the deal, aligns with the firm’s long-term goals
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Erin Cahill: by understanding the key considerations and strategies involved in M&A transactions, home care professionals can make informed decisions that drive growth and success for their agencies.
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Erin Cahill: Today we have on the panel Rachel Boynton, an international M&A expert and a consultant in the field for over 6 years. She is the founder of Rachel Boynton Consulting, and has a niche in providing M&A consulting services with respect to operational, excellent, and strategic growth in home care, welcome to the podcast Rachel.
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Rachel Boynton: Thanks for having me. Erin.
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Erin Cahill: So we’ll jump right into it. What are the most common operational challenges that home care organizations face during the M. And a process? And how can they be mitigated?
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Rachel Boynton: Yeah, I mean, I think your intro was perfect. It is a very overwhelming process. And I think a lot of people go into it, not understanding how daunting and overwhelming the process can be. In particular, the diligence process, which is, once you get that offer, is difficult. I mean, I’m sure a lot of owners get cold calls all the time with all these great-sounding offers.
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Rachel Boynton: But then comes the diligence, and that can be very difficult when you’re trying to run a company and trying to keep your day-to-day operations going well.
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Rachel Boynton: it can be very overwhelming, so I always suggest not only that you have an external team that will help you through the process. An advisor, you know, a good M. And a lawyer is super important. But you also look within your team to figure out who’s gonna help you? And be most beneficial to you
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Rachel Boynton: because it is hard to keep it a secret for a long time, especially when you’re digging into your clinical records or your Hr. Records or or financials. So, having a trusted team member. Is often very helpful.
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Erin Cahill: Absolutely, and how to assess the cultural fit between 2 home care organizations. And what strategies do you recommend for integrating cultures? Post merger.
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Rachel Boynton: I really tried to instill in buyers and sellers mostly sellers that it’s their burden to choose a buyer, so oftentimes someone will go to market to sell their company, and they think the one offer they get is what they have to accept.
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Rachel Boynton: It’s so not true, there are so many buyers out there that the sellers should do their diligence as well, and really get to know the company that’s looking to acquire them, and they need to see if the fit is there.
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Rachel Boynton: And if it is or isn’t, have that conversation with the Buyer, what are we gonna do to mitigate all of those risks because the cultures are different? How can we
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Rachel Boynton: creative strategy that will work?
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Rachel Boynton: And it’s very important to have those communications going on and discuss these integrations early on. But ultimately it’s up to the seller. The seller should choose their buyer the same way the buyer chooses a seller.
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Erin Cahill: Yeah, that’s a great way to think of it.
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Erin Cahill: And what are the key performance indicators that home care agencies should focus on to measure the success of an M&A deal. And how do you recommend tracking and analyzing those metrics?
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Rachel Boynton: Well, all of those measurements should be happening before the M&A process has even started right. So as an agency, you should be gathering your data, you should be making sure your quality is there? And tracking those outcomes. The important thing is that those outcomes should not change during the process. So it’s important that when you’re going through the process it’s business as usual. You can’t stall. You can’t
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Rachel Boynton: put things to the back burner. So ultimately all of those indicators should be coming through to the other side of the process, so that you’re ensuring that what you held important at the beginning or before the M. And a process is still being maintained, and those can be those industry standards, you know, measuring your recruitment and your retention
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Rachel Boynton: things that are done by other folks, but also what’s important for your organization. Maybe it’s a culture within your organization that you want to continue. Just make sure you keep measuring those until post close so that you keep those goals in mind all the way through.
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Erin Cahill: And how do you advise home care agencies to approach due diligence in an M&A deal and what are some common mistakes to avoid?
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Rachel Boynton: You gotta know that it’s just. It’s as bad as it sounds. I mean, you need to understand, and I can’t sugarcoat it. I can’t. I try to. I try to prepare people, and they still really don’t understand how cumbersome it is.
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Erin Cahill: Hmm.
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Rachel Boynton: You’re gonna have to turn over every single piece of paper that has ever crossed your desk in your company. Everything from your letters of incorporation to your billing.
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Rachel Boynton: your bank accounts, your attendance, or however you know you do your billing.
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Rachel Boynton: They’re gonna look at all of those things, and you have to have that ready. So again.
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Rachel Boynton: if before you get into this process, you can become as paperless as possible. That’s helpful having technology on your side, very helpful. Because once you can just give someone access to your electronic records that’s going to be a lot easier than folks coming into your office and scanning files. So
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Rachel Boynton: Any way that you can simplify your paperwork is helpful. Having one or 2 people on your team that you trust, and you bring into that inner circle during the diligence. Maybe that’s your Cfo. Or your clinical person that you can trust.
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Rachel Boynton: But bring people in to help you. Even if it’s outside. You want your outside accountant, and M. And a lawyer. Those are helpful people as well, but make sure you share a little of the burden, because it can be incredibly overwhelming, and most owners don’t touch all of those pieces. They usually delegate a lot of that. So if you do make sure you bring those people on
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Rachel Boynton: some of the pitfalls are, are things fall apart because an owner will get so wrapped up in the diligence process that they
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Rachel Boynton: start losing sight of running the business, or vice versa. They don’t pay attention to what is happening with diligence. And they say, Well, you know, running my company comes first and I’ll just get to that later. It’s true your company has to keep running, but
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Rachel Boynton: the more time you let go by the slower this deal can go, and the more likely things can fall apart. So you wanna be sure you keep your business running, but you also commit to that diligence process. Don’t take a vacation in the middle of it. Don’t empower the wrong person to represent you. Those things can really be dealers as well.
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Erin Cahill: And last question for you, what strategies do you recommend for retaining key employees and maintaining continuity of care, during the M&A process, and how can home care agencies ensure that seniors continue to receive high quality care.
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Rachel Boynton: Yeah, I mean I it all be. It all begins and ends with your staff. You know that care is gonna happen as long as your staff are with you along the way and committed to what they’re supposed to be doing, and that’s from the top down. So you wanna make sure I get my screen there? You wanna make sure that you are 1st of all, bringing in those valuable team members you need. I think that is gonna do that.
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Rachel Boynton: There we go.
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Rachel Boynton: You know, you wanna have a core team. You wanna if you don’t bring in some of your key leadership from the beginning. At some point before closing, you wanna start bringing them in, because what you don’t want is the day of closing when your most trusted key employees find out, and they find out along with everybody else. They feel very slighted that way. They don’t feel like they’re part of your team anymore. So you wanna have a very delicate transition process based on
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Rachel Boynton: who those key people are and when they really need to know. Because again, if you tell them a few weeks before close. Then you let it get into their heads and they react the way they need to with you, and then you can discuss it with them, and then they’ve gone through it. They’ve gotten to it. They understand that this is, it’s gonna be okay,
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Rachel Boynton: and that you, as a leader, are helping to ensure a smooth process. Then, when you have to pay, tell the rest of your staff they can help represent you as well. So now it’s not just you and the buyer against the entire organization. It’s you and your team sharing with sharing this information with the teams, and it’s a group transition as opposed to an adversarial, scary
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Rachel Boynton: kind of thing that happens. The other thing I like to do. I’d like to suggest to Sellers, think about creating a bonus structure for your key employees.
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Rachel Boynton: the 1st thing you’re gonna want to do is make sure that the buyer understands who the key employees are, and that they offer some kind of
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Rachel Boynton: agreement, some kind of contract employment contract, or such that helps those key employees feel good about staying on, but then you might also come up with a bonus structure at close to thank those key employees for helping you through this process, but also encourage them to stay post, because you know how important their continuity is
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Rachel Boynton: to the services that you’re providing. So there are several ways of helping with that, but those are kind of the easiest ones. I would suggest.
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Erin Cahill: Yeah, those are great great ideas. Well, thank you, Rachel, for sparing your time and sharing great insights. I’m sure the audience has found these useful, and thank you all for tuning in until our next episode. This is Erin Cahill, Signing off.
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