NPR had an interesting radio feature on June 10th called “Investors See Big Opportunities in Opioid Addiction Treatment” and rather than summarize the piece, the one tidbit to take away from our firm’s experience representing treatment providers in such deals is what we call the “Elephant in the Room” question – what is your prospective buyer really buying? Outside of real estate and goodwill, not much. There is no ability to buy qualified and necessary employees; licenses are not transferable upon change of principals of the the corporation; and we all know that “patient traffic” is more of an art than a science.
“Places like Gosnold are being gobbled up by private equity companies and publicly-traded chains looking to do what is known in Wall Street jargon as a roll-up play. They take a fragmented industry, buy up the bits and pieces and consolidate them into big, branded companies where they hope to make a profit by streamlining and cutting costs.”
If you are the reason your treatment center is so successful, and if they are not keeping you on board to ensure a safe and seamless transition, you should be very concerned that this is nothing more than a stock play for which you may actually find yourself liable on the back end under the premise of a fraudulent sale by the seller. I know, sounds crazy. Welcome to Wall Street and private equity investment.