Blood and organ banks have a unique business model. Among other notable advantages, companies within the industry enjoy relatively low competition and rising demand. This creates sales opportunities for existing owners. Below is a complete guide on how to value and sell a blood and organ bank.
About Blood and Organ Banks in The U.S.
Blood and organ banks collect, store, and distribute blood and blood products. For some blood and organ banks, this includes safely storing and distributing body organs. The most recent blood and organ bank industry numbers are as follows:
- There are approximately 1,900 blood and organ banks in the U.S.
- There was a 5.1% annual growth for blood and organ banks from 2018 to 2023
- Blood and organ banks generate $17.0 billion in annual revenue
- The annual profit for blood and organ banks is $696.8 million
- Experts predict a sizable increase in annual growth (2.8%) from 2023 to 2028
The blood and organ bank industry contains a high level of regulation. New owners must have accreditation, strong logistics systems, equipment maintenance, trained staff, and must meet licensing and regulatory requirements (Business Reference Guide). However, for established banks with a proven business model, there is high demand and low to moderate competition.
How Do I Determine The Value of My Blood and Organ Bank?
A market-based valuation considers your financial information and the value your blood and organ bank has that may not show up on financial reports, such as your growth potential, the diversity of your customer base, and the quality of your work processes. Your location and reason for selling may play a role as well.
However, your financials are still at the forefront of the discussions with prospective buyers, and your seller’s discretionary earnings (SDE) play a major role in your valuation. Additionally, business brokers consider rule of thumb data to determine the value of blood and organ banks. The rule of thumb data for this industry is as follows:
- Blood and organ banks sold for approximately 0.81 times the gross profit
- Blood and organ banks sold for approximately 0.73 times the annual net sales
What is The Sales Process for Blood and Organ Banks?
The sales process is slightly different for blood and organ banks than it is for other industries and business types since there is a need for accreditation and an understanding of how the industry works. The most notable steps of the sales process are:
- Prepare the necessary documentation
- Market your blood and organ bank to potential buyers
- Screen and evaluate prospective buyers
- Negotiate and finalize the sale details
- Complete the due diligence process
- Transfer ownership and close the sale
Here is a more in-depth review of each step of the sales process. We recommend speaking directly with a qualified business broker to better understand what you can expect throughout your sales journey.
1. Prepare The Necessary Documentation
First, you will need to prepare all of the documents you need for the sale. This includes the legal, financial, and operational documents that you have not yet prepared. Notably, you will need your:
- Business license
- Tax returns (3+ years)
- Profit and loss (P&L) statements
- List of equipment and vehicles
- Employee lists
This preparation can help ensure a smooth and speedy sales process without major setbacks. Your broker and attorney (and CPA, if applicable) can assist you with collecting and preparing the necessary documentation.
2. Market Your Blood and Organ Bank to Potential Buyers
This is when the exciting work begins. Your broker will bring your business to the market in a confidential manner. To maintain confidentiality, your broker will only use private channels to seek a buyer. Most experienced brokers have access to databases as well as industry connections, networks, and contacts that allow them to get your sales memo in front of hundreds of potential buyers.
3. Screen and Evaluate Prospective Buyers
Your broker will screen offers as they arrive. They will also keep you informed of the details of each offer so that you can properly evaluate them and decide which one best helps you reach your sales goals.
4. Negotiate and Finalize the Sale Details
Negotiations and contingency planning are also a vital part of the marketing stage when selling a blood and organ bank. Your goals may go beyond maximizing the sale price, and you may decide to negotiate terms such as keeping certain employees on staff with the new ownership. The marketing process ends when you select a buyer for your blood and organ bank and they sign a letter of intent (LOI) that establishes their intention to purchase as well as the terms of the purchase agreement.
5. Complete the Due Diligence Process
The due diligence process is necessary so that the buyer can confirm your legal and financial information. They may request your documents (the ones discussed above) as well as request a tour of your business operations and facility. They may also want to meet with you and other top executives and employees before settling the due diligence process and proceeding to close.
6. Transfer Ownership and Close the Sale
After due diligence, you and the buyer can schedule a time to close the sale at a time that is convenient for all involved parties (Including attorneys, etc.). The purchase agreement is signed, the payment for the blood and organ bank is transferred to the seller (and confirmed), and the transfer of ownership occurs during the closing stage. The employees and all vendors are notified that the sale has been completed. In some cases, the seller may assist beyond closing with the transfer to ensure a smooth process.
Start The Sales Process With a Free Consultation Call
Are you interested in (or considering) selling your blood and organ bank? If so, then our team here at Sigma Mergers and Acquisitions is here to help. We have helped hundreds of business owners sell for fair market value via our brokerage and consultancy services. Schedule a consultation today to learn more and get started.
Scot Cockroft is the Owner & President of the #1 ranked Business Brokerage, Business sales and M&A firm in Texas. Scot has been named Named Deal Maker of the Year by Dallas Business Journal.
He is committed to a “different” type of business brokerage firm, one that is NOT about a sales pitch but, rather, results! In short, a business brokerage firm that is committed to performance-based compensation. Scot believes in these principles as well as a candid honesty with clients. His candid style often takes buyers and sellers by surprise, but is often what assures successful connections between the two.
Feel free to reach out!
