Merger & Acquisition Services
Nemzoff & Company specializes in coordinating all elements of the merger & acquisition process. Our clients remain in control of the decision process, while Nemzoff & Company coordinates and manages the project team and leads the negotiating efforts. One of the greatest challenges facing the health care industry today is dealing with the process of market consolidation. Competitive forces, as well as increased managed care penetration have created a situation that is causing many organizations to question their long-term viability as stand-alone hospitals. For many hospital boards or management teams, a merger, acquisition or divestiture will be the most important decision they will make regarding their organization. Because of the complexity and size of such transactions, the risks to your organization can be substantial.
There are six options available to most acute care hospitals relative to mergers & acquisitions. They can maintain the status quo, buy, sell, merge, joint venture or network. We believe that it is important for an organization to fully understand the implications of each option. However, it is our experience that a significant amount of time and effort is not necessary to review these options in great detail. Most of our clients know what they need to do, they simply do not know how to complete the process. After a high level review of the advantages and disadvantages of each option, it is usually fairly obvious as to which of the options should be selected. In fact, our options assessment procedures usually do not involve a recommendation to the board, although we can provide such guidance. Our role is primarily to assist the board in understanding the ramifications, both positive and negative of each option.
Divestiture Planning & Implementation
Selling a hospital is probably one of the most difficult decisions a hospital board will ever make. Issues of employee layoffs, retention of management or perceived change of mission can be traumatic for a community and debilitating to day-to-day services. Our divestiture planning process focuses on three issues: confidentiality, rapid transaction closure, and minimal disruption of hospital operations.
Nemzoff & Company will prepare a confidential memorandum detailing key facts about the hospital; identify qualified buyers through our extensive database; coordinate the execution of confidentiality agreements; supervise the bidding process and develop the structure of the transaction. Our services also include a valuation analysis, and if required a fairness opinion.
One of the primary reasons why hospitals do not consolidate through the acquisition process is they cannot resolve the issue of who is to control the surviving entity.
Many consolidations often described, as “mergers” are actually acquisitions because one of the two parties is clearly in control after completion of the transaction. The issues of “shared” control can be a sensitive one, and Nemzoff & Company is skilled at working through this important, and sometimes emotional, issue.
We also assist clients in avoiding some of the common mistakes made during merger activities, such as forming and staffing a parent company, guaranteeing everyone jobs and trying to keep both hospitals fully operational when consolidation of services is appropriate.
Nemzoff & Company assists hospital boards and senior management in developing a workable structure for merging hospitals when consolidation is obviously the best alternative. With years of experience in structuring the process, Nemzoff & Company is extremely effective in managing each step toward a successful consolidation.
It has been our experience over the past few years that many mergers are discussed but not completed. This has allowed the for-profit companies to acquire facilities that could have merged with other non-profits in order to help consolidate local markets, but did not. The primary cause for this situation is that non-profit management teams and boards will not give up or share control. Instead, they attempt to create elaborate organizational structures that are doomed to failure. Nemzoff & Company has been able to resolve this problem for many clients through their extensive expertise in this area.
If we can be assistance to you, please contact us at 215.642.2401. We look forward to speaking with you.