How Will The Election Affect The Rehab M&A Market?
Join Paul as he explains how Tuesday's results will change the opportunities this market will be offering next year.
Full transcript
Generated from the episode audio and lightly edited for readability.
Hello and welcome to another episode of the Martin Rehab M&A advisory. I'm Paul Martin, founder and president of Martin Healthcare Advisors, and I want to welcome you to a very special postelection episode. With the election finally behind us, I just wanted to take a few minutes to provide some insights on what lies ahead for the outpatient rehabilitation M&A market as we move into 2025. First, let me start by saying this is not about politics. This is about preparing your business for the opportunities that are coming.
And trust me, there will be plenty of opportunities on the horizon if you are ready to seize them. You know, we all know this. Elections stir up excitement. And yes, yesterday the stock market responded strongly. But let's take a moment to focus on what matters most in our industry. Generally and historically after elections, the overall economic impact on markets like ours takes a long time to materialize, typically about a year. The good news, before the election, we already had very favorable conditions for an M&A for M&A and rehab, including the drop in interest rates from the Feds.
And while we haven't fully seen the effects of that yet, those lower interest rates are going to drive fresh money into this market over the next 3 to six months. This is the microeconomic perspective that I really believe we all need to focus on today. Interest rates are low. There's plenty of capital available. And private equity firms and national acquirers are actively looking for opportunities in this industry. You know what I've seen in the past and what I expect that we will see again. You know, our team has seen this many times.
Historically, when there is a new cycle like we are getting into right now, there's a two-wave cycle in the rehabilitation M&A market. In wave one, that's when the strongest deals happen. This is when the most aggressive buyers are competing to secure the top performing businesses in the United States. And this is when valuations often are at their peak. Wave two becomes slightly more reactionary. It happens after the biggest players have already made their big moves and buyers in this wave become more selective and deals tend to be more strategic than competitive.
So what's the key point here? Well, it's always better to be in wave 1. If you've considered selling your business in the next or if you're considering selling your business in the next couple years, this is the time to start preparing as we're looking out and seeing what we have in front of us. And sooner might be better than later if you want to maximize the value of your company. To give you the clearest picture of what's happening, we've already lined up discussions with four major acquire CEOs and we're going to be doing several more in the weeks ahead.
By the time it's all said and done, we will probably have interviewed 15 CEOs in this industry. And these leaders all have their fingers right on the pulse of what's driving this market now. And we're going to dig in to how they see the market playing out over the next six to 12 months. We're going to share these insights with you very soon. We're starting these interviews next week. But here's what you should do and know today. As I said, there's fresh money in the market.
Acquirers are ready and conditions are looking really good for 2025. So, my question for you is, will you be ready to take advantage of these conditions? Here's my advice. If selling or partnering was already part of your long-term plan, don't wait until the second wave. Let's figure out if this is the market that is right for you now. And as you know, our outside in assessment will do just that for you. Our team many years specializes in helping outpatient rehabilitation businesses just like yours get prepared, positioning for that wave one.
And we want to make sure you're at the top of the top acquirers list. Look, I really appreciate you taking time to listen and stay tuned for updates from our CEO discussions. And if you want to stay in tune in what is happening in the outpatient rehabilitation industry, click below and describe and subscribe to our show. We are literally a news channel for this industry. So click below, subscribe, and we'll look forward to having you involved in these discussions in the future. Thanks, and have a great day.
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