Health Law Highlights

Five Key Analyses for Healthcare Financial Due Diligence

Summary of article from VMG Health, by Grayson Terrell, CPA:

In the complex landscape of healthcare mergers and acquisitions (M&A), informed decision-making and financial due diligence (FDD) are crucial for both buyers and sellers. FDD involves a detailed investigation of a company’s financial information to validate its true operating potential, with the purchase price usually based on a multiple of the company’s EBITDA. Five key aspects of FDD include Quality of Earnings, Quality of Revenue, Pro Forma Considerations, Net Working Capital, and Debt and Debt-Like Items. These elements help normalize earnings, convert revenues, project future business directions, determine necessary operating capital, and understand a company’s debts and liabilities. Overall, FDD is a necessary step for achieving successful, lucrative transactions in the healthcare sector.