How to Sell an Ambulatory Surgery Center

Sell an Ambulatory Surgery Center

Do you want to sell an ambulatory surgery center? If so, it is essential to understand the basics of selling your business to ensure a successful and efficient process. This review from an experienced broker outlines the sale process, from determining the value of your ambulatory surgery center to ensuring all goes well at the closing table. We also provide insights into the industry and give tips on formulating your business valuation. 

About The Ambulatory Surgery Industry

Ambulatory surgery centers, also called outpatient surgery centers, same-day surgery centers, or ASCs, provide urgent surgical care. These services are often necessary for accidents, trauma, and medical conditions. These centers are highly profitable and have shown substantial growth throughout the past five years. Similarly, 24-hour emergency rooms, urgent care centers, and medical clinics have similar valuations and services. Experts expect the industry to continue growing through 2028 (at least). Here is a closer look at the numbers:

  • There are approximately 50,000 ambulatory surgery centers in the U.S. 
  • There was a 3.7% increase in annual growth for the ambulatory surgery industry from 2018 to 2023
  • The ambulatory surgery industry generates $197.0 billion in annual revenue
  • The annual profit for the ambulatory surgery industry is $3.57 billion
  • Experts predict a sizable increase in annual industry growth (4.4%) from 2023 to 2028

 

Many ambulatory surgery centers offer elective procedures as well. Pent-up demand for elective operations drives the growth projections for the industry as well. A rising number of Americans entering the 65 and older range may contribute to substantial industry growth as well. For ASC owners planning their exit strategy, now is an excellent time to consider a sale due to higher-than-normal valuations in the current market. 

Your Guide to Selling an Ambulatory Surgery Center

The steps that are involved with the sale of your ambulatory surgery center may include a professional valuation, the creation of a sales strategy, negotiations with buyers, a due diligence process, and the closing of the sale. 

Step 1: Professional Business Valuation

Your financial information determines your value, along with other factors that do not fit into a financial report (i.e. your unique selling proposition). Most commonly, this includes your seller’s discretionary earnings, gross profit, net sales, and earnings before interest, taxes, depreciation, and amortization (EBITDA). These financial metrics are used with rule of thumb data to provide a base valuation before other considerations. Here is the rule of thumb data for the ambulatory surgery industry: 

  • Ambulatory surgery centers sold between 2.20 to 2.41 times the Seller’s Discretionary Earnings (SDE)
  • Ambulatory surgery centers sold between 0.40 and 1.23 times the annual net sales
  • Ambulatory surgery centers sold between 5.21 and 38.21 times the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)

 

Your professional valuation is essential before you begin the sales process. One of the primary goals of any business sale is achieving the maximum value for your company. A valuation tells you how much your ambulatory surgery center is worth and allows you to decide when and for how much you list your company. 

Step 2: Create Your Sales Strategy

You then want to plan your sales strategy. Your ambulatory surgery center may benefit more by waiting to go on the market. In some cases, businesses wait weeks, months, or even years before selling to ensure they enter a buyer’s market and can get top dollar for their company. You may decide to wait if you are not happy with the current valuation and want to improve your valuation before fielding offers. If you are happy with the valuation and there is demand for ambulatory surgery centers such as yours, then you can begin preparing your sales documents and can start the marketing process (see below). 

Step 3: Prepare for The Sale Process

If you receive the valuation you were hoping to receive, it can be tempting to rush to the market. However, this can make processes such as due diligence take longer and can impact your ability to sell. Instead, take some time to prepare all of the documents you will need. This includes your financial information (three years of tax returns, etc.), your client lists, a copy of your insurance policy, and more. 

Step 4: Negotiate with Potential Buyers

A business sale is far different than other types of sales. Most notably, this is because you are not advertising and marketing your business publicly. You cannot place a for sale sign in front of your storefront, and you are not taking out for sale ads in the local newspaper. Instead, you are selling your business confidentially and privately. This is one of the reasons why a business broker is essential. They maintain your confidentiality and find buyers via their private networks, contacts, and databases. Your broker also assists with negotiations until you find the right buyer. 

Step 5: Select The Right Buyer

You may receive multiple competitive offers for your ambulatory surgery center if you price it for fair market value. This could drive the price up above what is considered fair market value. However, choosing the right buyer goes beyond simply accepting the highest bidder. For many sellers, it is also essential to ensure they carry on the established vision and direction of the company. For instance, this may entail keeping certain executives or employees. Once you find the right buyer and they sign a letter of intent, then you can proceed to the due diligence stage. 

Step 6: Complete The Due Diligence Process

Due diligence is the stage where the buyer reviews all business information (operational, financial, and legal). They may request documents that include but are not limited to your tax returns (three years minimum), profit and loss statements, internal revenue sheets, client lists, insurance policies, lease policies, operational licenses, employee sheets, and more. This process should be structured and follow a strict timeline, rather than allowing the seller to spend months reviewing information. 

Step 7: Close The Sale

You can schedule your closing after due diligence. The purchase price is reviewed (along with other details of the purchase agreement) at the closing table. Your attorney and the buyer’s attorney are likely to attend. Before closing, you may need to prepare certain documents, such as tax forms, transfer documents for ambulatory vehicles, etc.; insurance information is usually detailed in the purchase agreement and reviewed during closing as well. 

Of course, the payment is sent and verified during closing also. Your attorney and business broker can assist you with preparing for closing. The transfer of the business may continue past the closing date. Once the sale is complete and the business is transferred, you are free to start the next chapter in your life.

Sigma Mergers and Acquisitions Can Help You Sell for Fair Market Value

Here at our business brokerage and specialized consultancy, we take pride in assisting business owners with the sale process. We have helped hundreds of business owners sell for fair market value, and we are here to help you through the process as well. To learn more and receive a free business valuation, schedule a consultation with us today. We are also glad to answer any questions or concerns you may have during our initial call. 

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Scot Cockroft Business Broker
Hi, I’m Scot Cockroft.

When I founded Sigma Mergers and Acquisitions back in 2003, I had sold my business the year prior.

Now, that can sound good, but let me tell you, back in 2003, it was not easy to sell a business. Not that I’m saying in modern day times it’s easy to sell a business, but back then I interviewed broker after broker after broker, and no one was interested in actually seeing the value that my business brought to the table.

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Sigma is a the leading business broker in with Corporate offices in Dallas/Fort Worth with roots from 1984. Over 600 businesses sold in Dallas, Fort Worth, Texas, Oklahoma and across the South. Sigma provides full business brokerage services with NO upfront fees. We provide Market approach business valuations for business sales. Sigma is passionate about helping business owners achieve their goal of financial security. Contact us today for a free no obligation business valuation. We are here to help you achieve your goals.

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