After you’ve done the work of selecting your advisory team, the next step is to formally start the process. This isn’t just about signing a document; it’s about launching a structured, multi-phase journey designed to protect your interests and maximize your practice’s value.
Here is a clear, step-by-step guide to what you can expect after you decide to work with a professional M&A advisor.
Phase 1: Preliminary Analysis and Strategic Alignment
Before any contracts are signed, a reputable advisor invests time to understand your practice and your personal goals. This foundational phase ensures the entire strategy is built on solid ground. You wouldn’t want a surgeon to operate without reviewing your charts; similarly, an advisor must perform their own diligence first.
This stage typically involves:
- Deep-Dive Discovery: We start with in-depth conversations to understand your motivations. Are you looking for a full exit to retire? A partial sale to de-risk and find a growth partner? Your answer shapes the entire strategy.
- Preliminary Financial Review: You will be asked to provide financial statements. The advisor will analyze this data to calculate a preliminary Adjusted EBITDA, the key metric buyers use for valuation. This gives you an early, realistic idea of your practice’s market value.
- Strategic Options Planning: Based on your goals and financials, the advisor will outline the most likely paths. This could be a sale to a strategic buyer, a partnership with a private equity-backed platform, or a roll-up into a larger Management Services Organization (MSO).
This initial work ensures you and your advisor are fully aligned before formally committing. It confirms your practice is ready for the market and sets realistic expectations for the outcome.
Phase 2: Formalizing the Partnership with the Engagement Letter
Once you’re aligned on strategy, you officially hire the advisor by signing an engagement letter. This is the legal contract that governs your relationship. While your attorney should always review it, a trustworthy advisor will provide a clear and fair agreement.
Here are the key terms to understand:
- Scope of Services: This section details exactly what the advisor will do, from preparing marketing materials and contacting buyers to managing negotiations and coordinating the closing.
- Term and Exclusivity: Most agreements last for a set period (e.g., 6-12 months) and grant the advisor the exclusive right to represent you. This ensures a focused, coordinated process without mixed messages to the market.
- Fee Structure: This outlines how the advisor gets paid. It’s a critical component that should be transparent. To learn more, read our detailed guide to M&A advisor fee structures.
- Tail Provision: A standard clause that ensures the advisor is compensated if you sell the practice to a buyer they introduced, even after the engagement term has expired.
- Termination Clause: This defines how you or the advisor can end the agreement if the relationship isn’t working.
Deciding on an advisor is a major decision. Our guide on how to select an M&A advisor can provide further help in making the right choice.
Phase 3: Go-to-Market Preparation and Execution
With the engagement letter signed, your advisor begins the intensive work of preparing your practice for sale. This phase is about crafting a compelling story and presenting it to the right audience.
The key activities include:
- Due Diligence Preparation: Your advisor helps you assemble a secure virtual data room (VDR). This involves gathering several years of financial statements, provider employment agreements, key contracts, and documents proving compliance with regulations like HIPAA and the Anti-Kickback Statute.
- Developing Marketing Materials: The advisor creates professional documents to present your practice to potential buyers.
| Document | Purpose |
|---|---|
| Teaser | A one-page, anonymous summary of the opportunity, used to gauge initial interest from a broad list of buyers without revealing your identity. |
| CIM (Confidential Information Memorandum) | A detailed, 40-50 page book on your practice, shared only with qualified buyers who have signed a Non-Disclosure Agreement (NDA). |
- Targeted Buyer Outreach: Using their proprietary database and industry networks, the advisor discreetly contacts a curated list of potential buyers—ranging from large health systems and private equity groups to independent physician groups—who are the best strategic and financial fit.
Phase 4: Managing Diligence, Offers, and Negotiations
Once buyers express interest, the process moves into a highly active phase of diligence and negotiation. Your advisor acts as the “quarterback,” managing all communications and shielding you from the pressures of the process.
Here’s what your advisor handles:
- Managing Due Diligence: The advisor fields all questions from buyers and their teams, coordinates requests for information, and manages the VDR. This allows you to focus on running your practice.
- Evaluating Offers: As Indications of Interest (IOIs) and Letters of Intent (LOIs) arrive, your advisor helps you analyze them. They will model out different scenarios and advise you on the pros and cons of each offer, looking far beyond the headline price. For a closer look at this document, see our guide to understanding the Letter of Intent.
- Driving Negotiations: By managing a competitive process with multiple interested parties, your advisor creates leverage to negotiate better terms on everything from valuation and deal structure to your post-closing role and responsibilities.
Phase 5: Closing the Deal and Managing the Transition
The final phase is about getting the deal across the finish line and ensuring a smooth handover. Meticulous oversight from your advisory team is essential to prevent last-minute issues.
The key steps are:
- Finalizing Definitive Agreements: The advisor works closely with your legal counsel to finalize the legally binding purchase agreement and other ancillary documents like employment contracts and non-compete agreements.
- Coordinating the Closing: They manage the closing checklist, ensuring all conditions are met, all signatures are obtained, and the funds are transferred correctly and on time.
- Post-Closing Support: A good advisory relationship doesn’t end the day the deal closes. Your advisor should remain available to help manage the initial transition, ensuring earnout triggers are understood and the integration gets off to a good start. For more complex integrations, they may also recommend bringing in specialized post-transaction consultants.
The M&A engagement process is a well-defined path. By partnering with an experienced healthcare M&A advisor, you bring structure, expertise, and leverage to one of the most important transactions of your professional life.
If you are ready to explore what this process would look like for your practice, contact us for a confidential discussion.
Frequently Asked Questions
What are the distinct phases of the M&A advisor engagement process for selling a medical practice?
The M&A advisor engagement process is divided into five clear phases: 1) Preliminary Analysis and Strategic Alignment, 2) Formalizing the Partnership with the Engagement Letter, 3) Go-to-Market Preparation and Execution, 4) Managing Diligence, Offers, and Negotiations, 5) Closing the Deal and Managing the Transition. Each phase builds upon the previous one to create a structured sale journey.
What key terms should I look for in an M&A advisor engagement letter?
The engagement letter should clearly outline: Scope of Services (advisor responsibilities), Term and Exclusivity (duration and exclusive representation rights), Fee Structure (success fees, retainers, and tail provisions), and Termination Clauses (conditions for ending the agreement). Reviewing these terms ensures clarity and fairness in the partnership.
How long does the typical M&A advisor engagement process take from signing to closing?
While the article does not specify exact timelines, typical engagement agreements last 6-12 months. The process duration depends on preparation, market response, due diligence, negotiations, and closing coordination. The structured phases are designed to keep the process focused and efficient.
What preparation is needed before my practice is shown to buyers?
Preparation involves assembling a secure virtual data room (VDR) containing multiple years of financials, provider contracts, compliance documentation (like HIPAA and Anti-Kickback regulations), and preparing marketing materials such as a Teaser and a Confidential Information Memorandum (CIM) to present your practice attractively and confidentially.
How does an M&A advisor support during due diligence and negotiations?
Your advisor coordinates all buyer questions and document requests via the virtual data room, protecting you from information overload. They help evaluate and compare offers, considering deal structure and contingencies beyond price. They also manage negotiations to create competitive tension that secures the best possible terms and protects your interests throughout.
