Is an M&A advisor worth the fee? The ROI in real numbers

The short answer

Is hiring an M&A advisor worth the fee, or should you handle your physical therapy business transition yourself? The answer is math, not opinion. Paul Martin, Founder and President of Martin Healthcare Advisors, walks through it, including when you should not hire an advisor.

In this video:

• When to do it yourself: the buyer is already decided, the price is set by your operating agreement, or speed matters more than price
• Value = earnings x multiple. With one acquirer at the table, they set both sides of that equation.
• A competitive process changes who sets the multiple. You choose among offers instead of negotiating against one.
• One turn of multiple on $1 million of earnings is $1 million
• The terms matter as much as price: your role, how long you stay, your staff, your name on the building

Full transcript

Whether an advisor is worth the fee is a fair question. And the answer is math rather than opinion. Here's the honest part, and it cost me money to say it. Yes, you can do it yourself, and some owners should. If the buyer is already decided or the price is set by a formula in your operating agreement, you need an attorney and an accountant, not me. If speed matters more to you than price, that is a real reason. If that is you, I just saved you a fee.

For most physical therapy business owners looking to sell, you should really consider an advisor. Our fee is published, and it is the only cost anyone compares. Your value is your earnings times a multiple. And with one acquirer at the table, they set both sides of that equation. A competitive process changes who sets the multiple. Every acquirer at the same starting line, at the same time, with the same information, and now you are choosing among offers instead of negotiating against one.

One turn of a multiple on a million of earnings is a million dollars. Our last prepared owner moved three turns, from five times to eight times. The other half is the terms. Your role, how long you'll stay, your staff, your name on the building. Nobody tells you which of those an acquirer will actually move on. So most owners accept them as written and live inside them for years to come. That is what owners call me about afterward, and it is almost never the price.

So, you can do it yourself. You just cannot know what it cost you. The fee is knowable. Doing it alone is not.

Transcript lightly edited for readability.