With demand driving prices to record levels for clinical laboratory companies and anatomic pathology practices, merger and acquisition (M&A) activity in the lab industry continues to grow across the United States.
Just two weeks ago, Sonic Healthcare, Ltd. announced that it was purchasing Clinical Laboratories of Hawaii, LLP for an estimated $121 million dollars. That sale is expected to be completed by the end of third quarter this year. (See Dark Daily, June 30, 2008)
Still unannounced as of this date are the winning bidders for the laboratory outreach business of Stanford University Medical Center and the laboratory testing division of Carilion Clinic. Earlier this year, officials from both institutions disclosed that their laboratory businesses were up for sale. (See Dark Daily, April 15, 2008)
At this year’s Executive War College in May, attendees participated in the lab industry’s first-ever conference on “Mergers & Acquisitions in Clinical Laboratories and Anatomic Pathology,” a program designed to bring potential sellers of clinical labs, pathology groups, and hospital lab outreach programs together with experts in law, valuation, negotiation, and financial planning.
Two speakers attracted particular attention: Doug Brown, Managing Director of Wachovia Securities and attorney Antony Konkoly, Esquire, of McDonald Hopkins.
Brown provided a concise review of the factors supporting higher valuations for laboratory assets and discussed details of some recent noteworthy lab acquisitions. According to Brown, lab owners need to recognize that there is no simple way to establish a single value for their laboratories because different buyers will place different values on a lab company’s existing assets and future growth prospects.
Brown also discussed details of the 2007 acquisition of AmeriPath, Inc. by Quest Diagnostics, Inc. for approximately $2 billion. With annual revenue of $750 million, it was estimated that the multiple paid in this transaction was as high as 17 times EBITDA (earnings before interest, taxes, depreciation, and amortization). Brown pointed to several unique factors, including market timing, that supported AmeriPath’s top-of-market valuation at the moment the deal was inked. He also explained that these same factors were not likely to be seen in the laboratory industry again anytime soon.
In this same session, Antony Konkoly offered some important M&A do’s and don’ts based on his considerable experience representing various parties in the sale of laboratory businesses, the establishment of laboratory joint ventures and the formation of new lab companies.
If you weren’t able to participate in this exciting new M&A conference, here’s another opportunity to hear Doug Brown’s take on the current state of mergers and acquisitions in laboratory and pathology.
Attorney Antony Konkoly, Esq. will once again join Doug Brown in this discussion. From Konkoly, you’ll learn about the mistakes lab sellers often make, and how you can fix those issues before offering your laboratory for sale. You’ll also get several proven recommendations on how to minimize tax consequences and maximize the net proceeds from the sale.
Whether you’re a lab owner or pathologist, you won’t want to miss this comprehensive new audio conference. Join Dark Daily and The Dark Report as they present, “Lab and Pathology Mergers & Acquisitions: Must-Have Essentials To Learn Before You Buy Or Sell A Lab,” on Wednesday July 30, beginning at 1:00 p.m. EDT (10:00 a.m. Pacific) and running for 90 minutes.
Don’t miss this special audio conference and your chance to listen to and ask questions of these two veteran lab industry dealmakers.