Selling a Health Care Business

One of the most popular types of businesses that buyers typically inquire about are health care businesses.  Investors tend to gravitate to growth companies that deal with issues pertaining to the aging population so selling a health care related business can have some opportunities, if sold properly.  This article examines a few points to think about if you own such a business in the Toronto area or southern Ontario.

Growth Potential
Business buyers look for businesses that have a proven history of growth as well as future earning potential.  Because of this, health care is a prime target.  Baby boomers represent the largest cohort in Canada so naturally there will be a market that exists solely to service their needs.

Different Types of Health Care Businesses For Sale
Within the category of health care businesses for sale, there are many categories that buyers generally ask about:

Clinics
There are many different types of clinics such as massage, physiotherapy, rehabilitation and so on.  The economics of operating a clinic may seem similar from a high level but some important distinctions exist, such as:

• Who is the payer?  Is it private, the province of Ontario or perhaps another third party payer such as insurance or WSIB?

• What is the skill level required to operate the business?  Does the owner need to be trained and certified or can a “financial buyer” be a good candidate to purchase the business?

• What is being sold?  If a business for sale is only offering a client list, the valuation process is markedly different is there exists expensive equipment.

Health Care Related Distribution Businesses
There are a growing number of products from withing Canada and around the world that need to make it to market.  Because of this, there are countless wholesale distribution businesses that serve the 'health care' industry specifically.   These types of businesses (usually) do not require a technical background but instead require the skills needed to operate a distribution operation such as inventory management.

Does the business offer a product or a service?
To expand on the previous two sections, if the business offers only a service, only a product or a combination of both then the business valuation will change quite substantially.

Competition
Although the Canadian health care industry is expected to grow well into the next generation, there does exist fierce competition from a variety of small and large player.  Pharmacies are a great example where some major national players have come to capture a substantial share of the market over the past 15 years.

If you are the owner of a health care related company and you are thinking of selling your business, consult with reputable business brokers with appropriate experience with selling a business in your specific field.