It is the Healthcare IT Entrepreneurs’ Dilemma. In order to become a Unicorn, you either have to survive or take a long detour around the Valley of Death, that strange netherworld where the value of your company can actually drop once you become marginally profitable. As counter intuitive as that may seem, it is strangely logical once you realize that valuation – especially in technologically innovative sectors – is rooted far more in “behavioral economics” than rigorous math. On this episode, Dexter Braff explains the phases of value a health IT company can anticipate and the challenges – and opportunities – it may face as it moves through them.
1:40 Who is Dexter Braff and the Braff Group
2:07 Stages of a company: Concept, Maybe Baby, There’s a there there, Breakout, Top of the World Ma!
6:10 Valley of death – Occurs between stages 3 and 4. Early investors get antsy, employees aren’t cohesive, management gets worried, it takes a lot of work to educate the consumer.
7:35 How to get the best valuation for the third stage company.
9:57 Unicorns have “unreal” valuations.
12:10 Why Unicorns don’t happen in healthcare.
14:38 How to find buyers who think you’re worth 10x revenue.
17:34 It takes a few offers to know what you’d ideally like to see happen.
19:49 Is it wrong to take advantage of a high valuation?
20:45 Adoption rates of Health IT and why valuation is hard.
22:07 Consumer driven healthcare is not a near term breakthrough.
22:47 M&A for Minicorns!
24:30 Decision making in uncertainty.
25:50 How fee for outcomes changed the opportunities for Health IT.
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You can hear more from Dexter on three recent and very popular episodes:
- Episode 28: How to Analyze the Health IT Market
- Episode 30: Why You Should Always Be Preparing to Sell Your Company
- Episode 40: Dexter Braff at HIMSS18
About Dexter Braff
Dexter W. Braff is President of The Braff Group, one of the nation’s leading health care merger and acquisition advisory firms (source: Thomson Reuters). Since its founding in 1998, the firm has completed more than 300 health care deals.
With 30 years of experience representing health care service companies, Dexter is recognized as the industry expert in health care M&A. He has written and contributed to feature articles that have appeared in numerous health care industry publications and has written a chapter in the Handbook of Business Valuation published by John Wiley & Sons. He is frequently interviewed on various topics regarding health care mergers and acquisitions by news outlets including Bloomberg News, CNBC, USA Today, The Huffington Post, The Palm Beach Times, and numerous health care sector journals. Additionally, the firm is the publisher of marketWATCH, a quarterly review of mergers and acquisitions activity in six industry segments: Behavioral Health Care, Health Care Information Technology, Home Health and Hospice, Pharmacy Services, Urgent Care, and Home Medical Equipment.
Dexter has presented seminars, webinars, moderated discussion panels, and has been the keynote speaker on various issues regarding health care mergers and acquisitions and finance at conferences across the country including Art of the Deal, the Remington Think Tank, Health Care Capital Investors Conference, HME News Business Summit, HHFMA Financial Managers Conference, Treatment Center Investment and Valuation, Foundations: Moments of Change, Behavioral Health Care: Buying, Selling and Valuing, National Association for Home Care, National Home Infusion Association Conference, Homecare 100, Long Term Care 100, Medtrade, Urgent Care Association of America, and many more. He was recently inducted into The Home Care and Hospice Financial Managers Association Hall of Fame as “deal-maker extraordinaire.”
Dexter holds an MBA from the University of Pittsburgh, a Master of Science from the University of Oregon, a Bachelors of Arts from Cornell University, and received the Vincent W. Lanfear Award for academic achievement.
About The Braff Group
The Braff Group is a leading mergers and acquisitions advisory firm specializing exclusively in health care services including behavioral health care, home health care, hospice, pharmacy services (home infusion, specialty Rx, institutional Rx), urgent care, health care information technology, health care staffing, home medical equipment, and ancillary health care services.
Unlike many brokers and investment sectors that work many sides of the negotiating table which can create conflicts of interest, we provide sell-side only transaction advisory services including representation, divestiture strategy, debt and equity recapitalizations, and valuation.
Since the firm’s inception in 1998, we have closed more than 300 transactions, more than any other mergers and acquisitions advisory firm covering these sectors.
Mentioned on the Show
In the Land of Unicorns, How do you Value a Health Care IT Company? Check out the article here!
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