Allied Completes the Sale of Mobile Medical Services

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Allied Business Group is pleased to announce the sale of St. Joseph, Missouri-based Mobile Medical Services to MobilexUSA.

Mobile Medical is a niche provider of health care diagnostic imaging services that serves a four-state region in the Midwest. Owner Zach Evans founded the company in 1992, which provides portable diagnostic X-ray, ultrasound and EKG services to long-term care facilities, nursing homes, assisted living communities, psychiatric facilities, home health agencies and hospices in the Midwest. Since being established, Mobile Medical has expanded to include Ozark Mobile Imaging, LLC and Clearview Mobile Imaging, LLC. All three entities were acquired by the purchaser.

Headquartered in Maryland, MobilexUSA is a subsidiary of TridentUSA Health Services and provides mobile imaging services to over 6,000 facilities in more than 30 states nationwide. The acquisition of Mobile Medical provides MobilexUSA with the opportunity to increase its market share in the Midwest and add to its network of 200-plus service locations. Furthermore, MobilexUSA will provide Mobile Medical with the resources to ensure that the company’s customer base continues to receive high-quality X-ray, EKG and ultrasound services in the face of significant changes in the health care industry.

Allied Business Group Managing Director Jeremy Simmons acted as the exclusive financial adviser to Mobile Medical in the sale process. Simmons has been involved in several transactions in the healthcare space over the past 18 months, and expects that trend to continue.

“Rising costs to keep up with technology and new regulations, as well as looming cuts in reimbursement rates are forcing smaller healthcare providers like Mobile Medical to rethink their long-term business strategy,” Simmons said. “The health care industry is very much in a consolidation phase, and players like MobilexUSA that have the capital and a diversified service offering have a much better shot at being successful in an industry that will be experiencing many changes in the near future.”

Allied Completes the Sale of Van-Am Tool & Engineering

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We are pleased to announce the sale of Van-Am Tool & Engineering, Inc. to a private investment group consisting of private equity firms 3P Equity Partners and Silver Sail Capital.  The group is excited about the transaction and looking forward to partnering with management to continue growing the business both organically and by acquisition. You can learn more about Van-Am by viewing the company’s website here.

Founded by Ivan Russell in 1981, Van-Am has grown into a leading provider of tool and die design and manufacturing, general machining and fabrication, stamping, laser cutting, and a wide variety of other manufacturing capabilities. The company currently has 55 employees and is well known within the industry for providing quality products and dependable customer service.

The new owners, who will retain all of the company’s current employees, were seeking to invest in a manufacturing company with a strong management team and a history of stable financial performance. Ultimately, they determined Van-Am fit their investment criteria and showed promising growth potential. Russell, who plans to retire, says the new investors will be able to provide the financial resources and leadership needed to pursue current growth opportunities and expand the company.

Allied Business Group’s founder and managing director, Tim Skarda, acted as the exclusive financial advisor to Van-Am in the sale.

How to Sell Your Sale to Employees

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The M&A process is very demanding and a business owner should be enthusiastic when they find a compatible buyer for their company. One fact that should never be overlooked during the sale process, however, is that your employees may not share your excitement. Employee dissatisfaction can negatively impact a deal’s ultimate value or even cause its collapse. Therefore, it’s important to plan how to sell your sale to your employees before the deal is announced.

Breaking news
Once you begin the M&A process — likely as soon as you start preparing your company’s financials for the market — news that major change could occur is likely to filter down to employees. Unconfirmed rumors, assumptions surrounding worst-case scenarios, and employee feelings of powerlessness over the future of their jobs can cause considerable morale problems, particularly if management remains silent.

Deal negotiation details need to be kept confidential for legal and strategic reasons, but the management team should be in regular contact with human resources staff and mid-level managers to get a sense of what employees are hearing and whether they’re spreading misinformation. If rumors are circulating, you could hold a company meeting to let employees know that a sale is being considered and to dispel untrue information. If you aren’t in a position to reveal details of a possible deal, simply tell them that.

Don’t sugarcoat facts
Once you’ve negotiated the details of your transaction and signed a sale agreement, work with the buyer to get employees up to speed. They should be briefed on their new owner’s business, culture and strategic objectives. You should consider holding informal introductory or Q&A sessions with small groups of employees and the buyer’s management team. You don’t want to create a sense of panic, but don’t sidestep hard facts, either. If layoffs or relocations are in the new owner’s plans, employees should know as soon as possible. At this time, you and the buyer may also want to discuss compensation, buyouts or retraining opportunities the new owners plan to offer.

Employee investment is key
Employees will naturally be worried about the new owner’s corporate culture and how they’ll fit into it. A good employee who’s been working hard for a promotion, for example, is likely to be concerned about unfamiliar management and the need to start over proving him- or herself to the new management staff.

To prevent this kind of anxiety and help ensure that key employees stay with the company, work with your managers to identify valuable and high-performing individuals. Introduce these individuals to their new managers so they can initiate a working relationship before your company is absorbed by the new ownership.

Open and honest
Change is always difficult for employees, particularly those who have been with the company for a long period of time. But as long as you’re proactive — heading off rumors early, communicating the facts as soon as possible and easing the transition for key employees — you should be able to sell most of your employees on your sale.

Asset Sale v. Stock Sale – What’s the Difference?

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When a business owner sells their company they will be faced with negotiating the structure of their transaction as a stock sale or asset sale. Buyers and sellers typically prefer opposing structures and business owners should understand how each of these sale types benefits a particular party.

In general, buyers prefer asset sales because they are able to “step-up” the depreciable basis on purchased assets as a way to reduce future tax liability. Additionally, in an asset sale, buyers can avoid inheriting all potential and contingent liabilities of the seller, whereas a stock purchase could expose them to contingent risk. Sellers would prefer to reduce their exposure to potential liabilities through a sale, which is one reason why they typically prefer a stock sale. Furthermore, sellers typically prefer stock sales because proceeds from the sale of shares are taxed at the lower capital gains rate.

Deal structure can have significant impact on the future implications for both buyers and sellers. Read our white paper explaining more about the differences between an asset sale and stock sale.

The Importance of Sell-Side Due Diligence

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Selling your company may be the most significant event in your career as a business owner. The stakes are extremely high because a successful deal is likely to yield great financial rewards. At the same time, the sale process can be very complex and mentally draining. Even the most successful and experienced business owners may find themselves unprepared for the challenges that arise during the sale process.

The current economic climate further complicates the sale process. Potential buyers are now scrutinizing companies more closely than ever. Issues that were once considered minor now may delay or even kill a potential deal. By enlisting a professional to help conduct thorough due diligence on your own company early in the sale process, you will reduce the likelihood of critical issues arising later. This will in turn help ensure you receive maximum value for your company.

Sell-side due diligence can help you realize full value from the sale of your company in a number of ways:

REVIEWING AND PREPARING FINANCIALS
An advisor with technical accounting and finance knowledge can examine and assist in the preparation and adjustment of your financial statements to ensure that your accounting policies meet normal business standards and to improve the overall financial image of your company. By reviewing financial statements for potential issues such as revenue recognition, inventory costing, unrecorded accruals, and quality of earnings, you can uncover potential concerns buyers may have about your company before they discover them during their own due diligence efforts.

ANTICIPATING BUYER CONCERNS
During the due diligence process, buyers may confront you with difficult questions concerning things such as operations, customer concentrations, or projections and expect valid, plausible responses. You will undoubtedly be able to anticipate some of these issues; however, ignoring them and hoping the buyer will overlook them during their own due diligence efforts is likely to back-fire. When the buyer raises these issues, you may not be prepared to address their concerns since you avoided dealing with the issues in the first place.

Withholding information or neglecting to tackle issues head-on can raise a buyer’s concerns and will likely result in a negative purchase price adjustment or no deal at all. On the other hand, by providing credible and accurate data and being forthcoming about potential problems, you will show buyer that you are trustworthy and are trying to manage a transparent process. Working with a qualified professional to complete due diligence on your own company will ensure that you are aware of, and prepared for most, if not all, of the questions that may arise.

ENSURING LEVERAGE IN NEGOTIATIONS
Due diligence experts typically put together a final due diligence report outlining their findings and analyzing the issues they’ve identified. By preparing due diligence documents early, you can share more in-depth information with interested parties before soliciting bids from multiple buyers. Potential buyers will likely feel more confident submitting bids, which will help create a competitive bidding environment between parties. Ultimately this will help ensure you receive maximum value for your company.

By sharing such information, you are not only helping them feel more comfortable with a potential investment, but you are also saving them some of the cost and effort they would spend during their own due diligence process.

While there are time and costs associated with performing sell-side due diligence, a business owner who hopes to receive maximum value for his company should be prepared to take any steps necessary to help ensure a transparent and smooth sale process. Reverse due diligence will help you prepare your company for intense buyer scrutiny and avoid stressful roadblocks throughout the sale process. Without proper preparation, you run the risk of receiving less than maximum value for your company or experiencing issues that prevent a deal from closing.