In our latest episode of the M&A Healthcare Insights Podcast, Andre Ulloa and Doug Walters discuss the importance of having a CPA and an advisor in a transaction. They also touch upon the role of financials, operational metrics, and net working capital in the M&A process.
In the healthcare industry, where there are countless complex regulations and compliance requirements, having a CPA who specializes in healthcare can be invaluable. They possess an in-depth understanding of industry-specific nuances and can provide guidance on various matters ranging from financial statements to regulatory compliance. Ultimately, a CPA’s role extends beyond financials and taxes. They also help prepare clients for life after the sale by providing insights into post-transaction income and other considerations that may arise. At M&A Healthcare Advisors, we recognize the importance of having a CPA on our team. That’s why we have partnered with Walters & Associates, a Florida-based firm with over 30 years of experience specializing in healthcare finance.
In this episode of the M&A Healthcare Insights Podcast, Andre Ulloa interviews Doug Walters, CPA at Walters and Associates. They cover a variety of financial topics, starting with the importance of having both a CPA and an advisor on a seller’s side during a transaction. A CPA plays a critical part in ensuring that the financial statements presented accurately reflect the company’s performance and position to the buyer party. Without a proper and thorough financial review by a CPA, potential errors or discrepancies can go unnoticed. These types of mistakes can undermine trust between parties involved in the transaction.
Additionally, the accuracy of financial statements is paramount when determining the price of a healthcare business during an M&A process. Buyers rely heavily on these financials to assess value and make informed decisions about acquisition opportunities. Often paired with financial statements are detailed operational metrics. A thorough analysis of referral sources, utilization rates, and identifying any referral or revenue concentrations can provide valuable insights into business viability and growth potential.
Another topic covered in this conversation is how Net Working Capital is handled in a transaction. CPAs can play an essential role by ensuring that Working Capital calculations are carefully performed before closing deals. This can help avoid disputes down-the-line as both parties will be clear about what constitutes Working Capital and how it is being calculated.
Tax implications are another critical aspect that requires the expertise of a CPA. A thorough understanding of tax provisions in asset purchase agreements or stock purchase agreements can ensure that tax implications are adequately addressed and accounted for during the transaction. State-specific tax laws, such as the pass-through entity election tax in California, require specialized knowledge to navigate effectively.
In conclusion, the involvement of a skilled CPA and advisor is crucial to ensure an effective M&A process in the lower middle market healthcare sector. From accurate financial statements to operational metrics analysis, Net Working Capital negotiation support to tax implications evaluation – their expertise plays an integral role at every stage of the transaction. By working closely with professionals who understand industry-specific challenges and requirements, sellers can maximize their chances of achieving successful outcomes when selling or recapitalizing their healthcare businesses.
Stay tuned for parts 2 & 3 of the conversation with Doug Walters.
