Provider services and solutions

Strategy and growth: Transaction services

The challenge

Mergers and acquisitions (M&A) remain robust in the healthcare industry despite a struggling global economy. Many providers see M&A as part of their growth strategies. That may soon change. New M&A tracking and reporting standards that took effect on 1 January 2009 will dramatically change the way companies negotiate and track accounts for mergers and acquisitions. Some of the changes will increase earnings volatility. Others may affect your organization’s deal structures and acquisition strategy.

If you are strapped for cash or burdened with debt, divestiture may be inevitable. You may choose to divest your organization of underperforming assets to raise much-needed cash and respond to stakeholder pressures for improved financial performance. For some providers, declines in credit ratings and market value severely limit their options. But don’t expect a good price for divested assets. There are few buyers. Lenders scrutinize deals closely, leading buyers to increase due diligence. Sales take longer. Prices are lower. It’s a buyer’s market and making deals is tough.

How we can help you

• You need to approach mergers, acquisitions, and divestitures cautiously and negotiate carefully. We can help you understand how new standards affect the M&A process, financial reporting and deal structures. We will help you determine whether a particular merger, acquisition or divestiture is financially advantageous to your organization.
• Mutually advantageous deal-making requires increased due diligence by both buyer and seller. We can help you develop strategies to mitigate risk and reduce the dilution and volatility of your earnings. After you close a deal, we can help you improve the management and implementation of new processes and IT system updates.

Common services include

• Identifying potential cost savings
• Preparing for rigorous buyer due diligence
• Mitigating common reasons for loss in asset value, including disadvantageous transaction terms and pricing and inadequate infrastructure planning for stranded costs