Consider a partner’s culture prior to a private equity transaction
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In this video, Gary W. Herschman, JD, discusses when a physician group should consider entering into a strategic transaction with a private equity group and what changes should be expected.
“The issue of whether a strategic transaction is right for any group is going to vary based on the group, not only the specialty of the group, but the size of the group and the physicians, the individuals who are owners of the group and their particular strategic objectives and desires,” Herschman, an attorney in the health care and life sciences practice of Epstein Becker Green, told Healio.
When considering entering into a strategic transaction with a private equity group, Herschman noted physician practices should consider whether monetization is important, if the practice is facing the increasing challenges of the health care market, the benefits to the group and, most importantly, the culture of the partner.
“Do we like what they are saying? Do they understand our practice? Do they understand our strategic vision as to how we can improve and grow, whether it be new offices, new ancillary services, additional ancillary services and the like, and is their vision the same as ours or not, and do we like these people?” Herschman said. “Do they seem trustworthy, and do they have experience in working with other physician groups in the same specialty or other specialties as our group? Those are all factors that need to be carefully considered.”
Herschman also noted little should change in a practice after a transaction. While the private equity partner cannot make clinical changes, he said the private equity partner will be involved in the business aspect of the medical practice.
“If they’re valuing your group at tens of millions of dollars or even more, they’re not going to invest that money and then change up everything,” Herschman said. “They’re going to invest and value you highly because they like what you do, they like your reputation, etc.”
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