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Mergers & Acquisitions
January 2019 Biodyne Mindset Newsletter

Understanding Mergers and Acquisitions in Behavioral Healthcare

Michelle Davis, DBH, Assistant Director of the DBH Program, Cummings Graduate Institute for Behavioral Health Studies

Mergers and Acquisitions (M&A) refers to the purchase, consolidation, or restructuring of companies. Acquisition occurs when one company assumes more than 50% ownership of another company, this is the most common type of deal. When two companies are joined together to create a new company this is referred to as a merger, this happens less often (Snow, 2018).

For any transaction (the legal terminology for a deal) to take place there must be a buyer and a seller. The buyer is the acquirer, and the seller is generally referred to as the target company, during the M&A process. The terms buyer and seller are the legal terms that will be used when contract documents are executed. The “Buyer” of a company can come in many forms; Strategic Buyers are often looking to acquire a company with the intention of combining at least some part of the target company, while Financial Buyers are often Private Equity (PE) funds (large pools of money often from many sources), there may even be companies that are financially backed by outside PE money, and finally there are occasionally individuals who purchase companies, however, this is rare (Snow, 2018). The “Seller” of a company could be looking to obtain growth capital (raise money to invest in the business), recapitalize (sell part of the company but retain control), sell more than 50% to allow a change or control, or sometimes the seller is interested in only selling one division, brand, or certain assets, this is referred to as divesting.

M&A steps that occur along the way to a deal (Corporate Finance Institute):

  • The development of an acquisition strategy by acquiring companies
  • Strategic growth to be acquired with high value for target companies
  • Determining search criteria for potential acquisition/target companies
  • Assessing and value analysis of target companies
  •  Negotiations
  • M&A due diligence
  • Deal Closing


Each of the steps listed above are a general overview of an entire process and contain their own specific nomenclature. For example, when valuing a company an important term to know is EBITDA, this refers to earnings before interest, tax, depreciation, and amortization. Basically, the entire cash flow cycle of a business. This calculation is often used to determine the value of the company, making it important in negotiations; banks may want to know the EBITDA when considering a loan.

The due diligence phase is a very complicated process usually attended to by executives, attorneys, accountants, and bankers. Due Diligence process ideally addresses all elements of the contracts/deal structuring, financing, closing, and integration. A Due Diligence Checklist may have more than a hundred items on it requesting information on the corporation, operations, financial information, real estate holdings and other assets, inventory, purchasing, supply, intellectual property (IP), human resources, strategic plans, debt, financing, leases, etc., (Snow, 2019). The list can be exhaustive, and this particular step is very time consuming.

Once the steps associated with making the deal happen are completed, the deal is signed, and the money is transferred, the attorneys, bankers, and accountants have concluded their work and usually end their involvement. This is when the work associated with the process of integrating the respective companies begins.

Integration is a critical and often overlooked part of the entire M&A process. Sadly, many companies do a poor job with this process, and as a result many deals fail to reach their anticipated goals and synergies because of poor integration.

Lake Capitol (2017) reports in that, “according to collated research and a recent Harvard Business Review report, the failure rate for mergers and acquisitions (M&A) sits between 70 percent and 90 percent”. Reasons given for this failure rate include rushing due diligence, not adequately addressing corporate culture and power issues, over estimating the respective integration team’s ability to collaborate, undervaluing opinions and insights from lower-level managers.

When deals succeed in reaching the synergies and results that were hoped for it is usually due to proper and thoughtful handling of the post-merger integration process, including addressing organizational culture differences, comprehending and embracing the value added by the new company, and leadership being more focused on the next steps with integration less concerned about the excitement and public attention the deal may attract (Success and Fail Rate of Acquisitions, 2017).

In the second part of this series we will do a deeper dive into M&A in behavioral health. There has been a significant amount of M&A activity in the behavioral health space in the past few years, and industry analyst anticipate this trend to continue into 2019 and beyond. It is likely that individuals working in integrated care may be impacted by this.


References:

M&A Process - steps in the mergers & acquisitions process. (n.d.). Retrieved from  https://corporatefinanceinstitute.com/resources/knowledge/deals/mergers-acquisitions-ma-process/

Snow, B. (2018). Mergers & Acquisitions for Dummies. Hoboken, NJ: John Wiley & Sons.

Success and fail rate of acquisitions. (2017). Retrieved from http://lakeletcapital.com/blog/2017/3/15/success-and-fail-rate-of-acquisitions

New Horizons in the Use of Medical Cannabis for Pain Medicine and Behavioral Health

Presenter: Dr. Fred N Davis, MD
Thursday, January 24, 2019, 11 a.m.-Noon PST


New Horizons in the Use of Medical Cannabis for Pain Medicine and Behavioral Health is a live webinar providing an introduction to Cannabis Medicine.

The field of cannabis science is rapidly evolving with emerging advances in applications to medicine. This webinar will review the history, biology, medical applications, controversies, and future direction of cannabis as medicine.

Benefits of Attending

  • Continuing Education - Earn continuing education units (CEU). Each webinar yields 1 hour of CEU.
  • Webinar Recording - Webinar recordings will be made available to all registered guests.
  • Ideas & Innovation- Discover new ideas, trends, innovations, evidence and advancements in integrated behavioral healthcare.
  • Perspectives - Learn from a diverse community of integrated care and behavioral health professionals and educators.
We invite you to share this opportunity with your network! Download webinar flyer.
REGISTER
Featured Integrated Behavioral Health Business of the Month

We invite you to learn more about Silver Linings Counseling, LLC lead by CGI Alumni member, Dr. Lori Crowson DBH, in Edmond, Oklahoma. Dr. Lori Crowson is a Licensed Professional Counselor specializing in individual, couples, and family therapy and serves as a private practitioner at Silver Linings Counseling working with a broad spectrum of patients. Silver Linings Counseling, LLC and CGI formed a partnership in 2018 to increase accessibility and affordability of the DBH degree program to the current and future employees of Silver Linings Counseling. 

Explore their website:
  https://www.silverliningscounseling.net
Connect with Dr. Lori Crowson, DBH on LinkedIn.
Learn more about Silver Linings Counseling and CGI's partnership.

Want your business featured in a future Biodyne Mindset Newsletter? Submit your request to info@cummingsinstitute.com for consideration.

Is advancing your career a goal for 2019? 

Check out our continuing education integrated behavioral health webinar series.  

Topics include: 
  • cannabis for pain management
  • inflammation and mental health
  • treatment of unexplained medical symptoms
  • health disparities of vulnerable U.S. populations
  • best practices in prescribing for depression and grief
Group discounts and discounts for multiple webinars available.
 
EXPLORE WEBINARS

Numbers don’t lie.
 
Why pay more for your doctoral degree? Cummings Graduate Institute is proud to offer the most affordable DBH program in the US.

Our affordable tuition is the same for in-state, out-of-state, and international students. Learn more about our affordable tuition.

Now accepting applications for Spring II 2019 Admission. Deadline March 1, 2019. Courses start April 8, 2019.

Start Your Application
Call for Proposals: Collaborative Family Healthcare Association's 21st Annual Conference

Collaborative Family Healthcare Association's 21st Annual Conference will be accepting proposals, Feb. 1-March 15, 2019. The conference is centered on workforce development for all member of the care team and will take place Oct. 17-19, 2019 in Denver, CO.

This conference will prepare early career professionals for team-based care, by assisting mid-career professionals in repurposing their skills for primary care, and by engaging senior leaders in advocacy and mentorship. The conference will also focus on clinician wellness for all stages of professional development.

For more information, click here.

2019 AzCA Counselor Annual Conference
 
Will you be attending the 2019 AzCA Counselor Annual Conference taking place Jan. 25-26 in Scottsdale, AZ?

If so, we invite you to stop by our table in the exhibiting hall and say hello!

Arizona Medicaid Innovation Challenge
 
The Medicaid Innovation Challenge focuses on innovators who can present market-ready solutions for Social Determinants of Health and Digital Member Engagement.

​If you are a qualifying healthcare entrepreneur (either for-profit or non-profit) who has an innovative solution to one of the two focus areas, this is an opportunity for you to present your solution.

Learn more.

Earlybird Rates Extended to Dec. 31
The Earlybird discount for the International Conference on Integrated Care taking place April 1-3, 2019 in San Sebastian, Basque Country, has been extended and is available to everyone until December 31 offering 10% reduction on all rates.

CGI will be in attendance, and we'd love to see you there!
Registration Now Open for ISSIC19

Registration is now open for IFIC's Summer School which returns June 2019. ISSIC19 will take place in the heart of Oxford, at Wolfson College, part of the University of Oxford. 

This course has been developed for those tasked with designing, implementing, leading and/or managing integrated care and want to learn more about the evidence-based tools and instruments available to them from around the world.


For more information, click here.
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