How COVID-19 changed M&A transaction structure

Despite M&A activity expected to decrease because of the COVID-19 pandemic, several deals have closed. Provident Healthcare Partners published a white paper exploring the structure of the deals that closed.

What you should know:

1. Buyers and sellers have to be flexible in this investing environment. Declining surgical volumes and decreased revenue, paired with an unwillingness from lenders to provide financing, is limiting how private equity firms can finance transactions.

2. Buyers looking to invest using pre-COVID-19 metrics have three options going forward:

  • Close a transaction at the previously agreed upon terms, believing the economy will recover in a "V" shaped curve
  • Halt the deal until they can assess how COVID-19 has affected business
  • Find a middle ground that mitigates some of the risk associated with closing a deal now

3. Sellers continue to pursue transactions to decrease administrative responsibilities and secure, at least temporarily, financial liquidity.

Provident said: "COVID-19 has put buyers in the unfortunate situation of simply not being able to move forward at the previously agreed upon structure. In fact, many transaction restructuring proposals have been made by buyers in an earnest effort to keep the transaction on schedule as a show of good faith to the sellers."

Read the entire white paper here.

More articles on surgery centers:
4 COVID-19 supply considerations for ASCs
5 hospitals, health systems opening or planning ASCs
ASCs reopening to patients: Check these 7 boxes 

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