This article is sponsored by health care mergers and acquisitions (M&A) advisory firm Stoneridge Partners. In this Voices interview, Home Health Care News sits down with Partner Brian Bruenderman to learn how the home health and home care M&A landscape is changing in 2021 and why he enjoys working with sellers.
Home Health Care News: Tell us about your career path prior to Stoneridge Partners.
Brian Bruenderman: I started in M&A work with a general business brokerage, but it didn’t take long for me to gravitate toward working primarily in health care. I spent the better part of two decades in corporate development acquiring home health, home care, hospice and behavioral health companies, starting out at ResCare, which is now known as BrightSpring. I also worked for Signature Healthcare and Almost Family, which later merged with LHC.
Being on the buy-side of so many transactions was a great education. I had to really understand at a very granular level each business I recommended for acquisition so I could explain to corporate leadership and our board of directors how each deal fit into the company’s overall plans. Having this perspective helped me understand the day-to-day challenges those businesses faced and how strategic acquisitions could be beneficial for parties on both sides of a transaction. That’s what led me to Stoneridge: I enjoy being able to help my clients find not just any buyer, but the right buyer for their company.
Are there any other differences working for sellers vs. buyers?
Bruenderman: Well, as a buyer, I never got to give anybody good news. Sellers never said, “Wow, that’s way more than I thought,” when I told them what I thought their business was worth, right? But now, when I find a great buyer for someone, I get to deliver a pleasant surprise.
You’ve been at Stoneridge for about a decade. What in your mind sets it apart in terms of its expertise in home health, home care and hospice M&A advisory services?
We really pride ourselves on understanding the companies we represent. Most of us have worked as operators or in corporate development, so we know the industry. We’ve spent time on both sides of the table, as buyers and as sellers, so we understand what makes a business attractive to a good buyer and we know how to find buyers that are the right fit for our clients.
Over the years I’ve had the chance to work with multiple firms and intermediaries, but I always just liked Stoneridge’s approach to the business. I had a really good relationship with our founder, Don Cummins, and he always believed in a personal way of doing business. I think we’ve done a good job of maintaining that personal approach with our clients even as we’ve grown.
What role do you see the full care continuum playing in the M&A landscape going forward for businesses in home-based care?
Bruenderman: I think we’re going to see an increased focus on parts of the care spectrum that aren’t always in the spotlight, like home care. That’s not to say that home care hasn’t been a valuable part of the discussion in our industry for a long time — it absolutely has. But I think we’re starting to learn even more about how important it is to the patient care continuum, and how much room there is for it to grow in the near future.
For example, look at some of the new technology coming online. Home care providers can now see higher-acuity patients compared to years past. They’re in a great position to actually give patients what they want – keeping them in the home longer and moving them out of higher-acuity settings more quickly. Think about medically-complex children in pediatrics, for instance. Home care providers using state-of-the-art technologies and methodologies can get them out of the hospital sooner and keep them out longer.
We’ve always known home care providers are the canaries in the coal mine. Their patients know and trust them. They’re in the home several hours a day, every day. They can see something before the doctor sees it, probably before the family sees it, and certainly before it becomes a more acute need and results in some higher-cost level of care. Combine that level of access with emerging tech, and I think savvy buyers will see lots of opportunity going forward.
Do you think the pandemic will change what buyers and sellers are focused on in the M&A landscape in 2021?
Bruenderman: In my opinion, the pandemic is one more reason why I think home care is due for some more attention this year. Patients have been reluctant to go into healthcare facilities, whether that’s for an outpatient procedure or for long-term care – they’d just rather stay home. So home-based services are well-positioned to succeed even as the pandemic subsides with the introduction of the vaccine. Another side effect of the pandemic has been record unemployment, which could actually help home care providers who traditionally struggle to stay fully staffed.
Finally, I think this health crisis has helped states better understand that home care is a needed service — without it, the resources to care for these folks are not there. We’ve seen a tremendous amount of activity and a significant amount of volume notably in the Medicaid-funded personal care space, as we’ve seen buyers recognizing that access to home care service lines is valuable. Everyone from strategic buyers and payers to equity-backed platforms are buying those companies.
I’ve also seen an increased interest in consumer-directed services. Some people call it bring-your-own-caregiver, but essentially, your caregiver is a relative, a friend or a neighbor. Three years ago, when I had one of these companies for sale, very few of my buyers even understood what it meant and how it worked. But I’m getting requests regularly now for agencies that offer those types of services.
Last, I think we’re going to see significant demand for pediatric services. Valuations for those providers have gone up significantly, and I think they’ll remain at a level that’s very attractive.
In that case, I don’t want to say “silver linings” because of how troubling this all has been, but do you see any upside from this unprecedented period and economic turmoil?
Bruenderman: If there is a silver lining, then I think it’s that, as Don says, the rising tide will lift all the boats.
There’s a lot of pent-up demand right now after months of uncertainty, and there are a lot of opportunities for anyone who’s been sitting on the sidelines and is interested in exploring a sale. You don’t have to be a $200 million company to fetch a premium valuation. Small-to-midsize companies represent a tremendous growth opportunity for equity-backed platforms and regional providers that are expanding through acquisition. There’s really room for everyone to have a successful exit in this market.
How do you see the typical buyer changing in the near-term versus recent months and years?
Bruenderman: I wish my crystal ball were that clear, but I think the biggest change I’m seeing right now is in the types of buyers entering the space. You still have plenty of your traditional strategic buyers, but we’ve seen an influx of aggregators willing to pay premium prices for platform companies. Then they start buying up smaller agencies at lower valuations.
Over time, they build a much larger combined entity that sells at a very attractive blended multiple valuation. I think we’ll continue to see these buyers enter the market, and as a result, valuations for sizable operations will stay high.
Lastly, what are you looking forward to in 2021 as a partner with Stoneridge?
Bruenderman: First of all, I’m looking forward to what I hope is a return to some sense of normalcy for the companies we work with. After almost a year of being on the front lines, I hope we’re close to the day when they can just refocus their attention on day-to-day operations without the threat of the pandemic looming over them.
I’m also interested to see how patients’ changing needs post-pandemic will alter the future of the industry. We’ve all been talking for a long time about how to help patients stay in their homes as long as possible, but COVID-19 has pushed the issue. Patients have experienced the benefits and convenience of home care over the past year. Now payers are getting on board, too. This industry is uniquely positioned to efficiently and effectively provide the kind of care patients want, and I think these providers will help the overall system evolve and grow in the future.
And that’s where we really excel at Stoneridge Partners: helping our clients prepare not only for right now, but also for what’s next. Our team has so much experience as operators and executives, and we spend a lot of time thinking about where the industry is going. It’s our goal to stay ahead of the game so we can give our clients every advantage.
Editor’s note: This interview has been edited for length and clarity.
Stoneridge Partners is a national health care mergers and acquisitions advisory firm specializing in the brokerage of home care, home health, hospice and behavioral health companies. For more information about their services, contact their corporate office at 800-218-3944 or via email at firstname.lastname@example.org.
The Voices Series is a sponsored content program featuring leading executives discussing trends, topics and more shaping their industry in a question-and-answer format. For more information on Voices, please contact email@example.com.