Implementing, Consulting & Training on External EHR Software
With over 1M in gross sales, this consulting firm successfully specializes in the implementation, integration, and workflow analysis of Electronic Health Records (EHR) for larger healthcare providers locally and across the nation. They do currently have $1.2M in Work in Progress, setting up the new owner well on future sales. There are 3 full-time employees in place, including 1 admin, 1 consultant, and 1 marketing person. They do use 1099 consultants as needed for business.
Helping providers manage systems such as Meaningful Use, the Physician Quality Reporting System, the Merit-Based Incentive Payment System, or Alternative Payment Model is integral to the work completed by this company.
Several certifications including R2, NAID AAA, ISO 14001, OHSAS 18001 are in place. Staff utilize their personal certifications, such asNCQA CCE, RHIT, CHTS-IM, and CHTS-PW to comply with project or contract requirements.
A buyer with a strong background in healthcare may find this business to be a great compliment to their existing skills. This business is currently a certified Women’s Business Enterprise with current contracts for such an owner.
- Year Established: 2011
- Location: Indiana
- Service Area: Local and national
- Large healthcare providers
- Healthcare software companies
- Community health centers
- Services: Implementation, integration, and workflow analysis of Electronic Health Records (EHR) for larger healthcare providers locally and across the nation
- Building: Utilize a co-working space
- Reason for Selling: New ventures
- Employees: 3 FTE, 5 - 1099 contractors
- Seller Training Period: Negotiable
- Growth Opportunities: Physician practices, compliance space, partner with larger healthcare systems; Growth on services: Add billing
- Current Owner’s Responsibilities: daily operations, contract management, sales, marketing management, budget analysis
- List Price: $850,000
- Gross Sales:
- 2017: $1,653,028
- 2016: $2,417,869
- 2015: $1,365,133
- 2014: $935,933
- Cash Flow:
- 2017: $292,970
- 2016: $177,172
- 2015: $294,993
- 2014: $246,509
- Assets Included in Purchase*
- Intangible Assets: Strong reputation, numerous certifications, and contacts
- A/R: $100,000
- WIP: $1,200,000
- Pipeline: $250,000
*amounts may vary
|Description of Financial Statement||Tax Return||Tax Return||Tax Return||Tax Return||Notes|
|Net Income Shown on Financial Statement||$113,129||$-20,637||$119,125||$-36,920|
|Compensation to Owner||$59,616||$65,000||$54,900||$98,673||Owner 1 *buyer can do the reoles and responsibilities of owners 1 and 2|
|Compensation to Owner||$52,570||$52,000||$49,000||$82,135||Employee 1|
|Compensation to Owner||$85,887||$96,000||$84,600||$98,673||Owner 2|
|11% Tax on total W2 Salaries||$21,788||$23,430||$20,735||$30,743|
|Meals & Entertainment||$118||$235||$53||$506|
|Office Admin.||$-45,000||$-45,000||$-45,000||$-45,000||Replacement of Employee 1|
|CRM||$2,500||$2,500||$2,500||$2,500||Non-onward going expense|
|Seller's Cash Flow = Total Addbacks + Net Income||$292,970||$175,989||$287,860||$231,343|
|Profit Margin||17.72 %||7.28 %||21.09 %||24.72 %|
- Buyer can do the roles and responsibilities of owners 1 and 2
· Large scale hospitals
· Local, State, and Federal Governments
· Community health centers with multiple inpatient facilities
· Software companies working with providers
· Physician practices
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
For this Company, about half of the services fall under ongoing support and half are project-based services.
|Meaningful Use (MU)|
Patient Centered Medical Health (PCMH)
|Physician Quality Reporting System (PQRS)|
Merit-Based Incentive Payment System (MIPS)
Additional information regarding services is available upon the receipt of a signed Non-Disclosure Agreement
- Owner 1
- Senior managing partner
- Oversees all operations
- Manages consulting staff
- Manages major relationships
- Owner 2
- Managing partner
- Sales and Marketing
- Manages sales and marketing staff
- Program Services Manager - 1
- Works full time with customers
- Responsible for success of meeting standards and goals
- Delivery Manager - 1
- Marketing and sales
- Building client relationships
- Administration - 1
- Human resources
- 1099 Consultants - 5
- Works with customers directly
- Program education
- Project planning
- Facilitate the use and integration of quality tracking programs
- Workflow analysis
- Expand client base
- Medium physician practices
- Larger health care systems
- Work with State and Federal programs/agencies
- Expand areas of specialization
- Move into the compliance area
- Other technical providers
- Companies that offer complimentary services
- Growth on services
- Add billing
The Firm Business Brokerage used a Cash Flow Valuation methodology to determine the Purchase Price of the business.
The formula used is as follows:
Cash Flow x Prescribed Multiple = Fair Market Value
Cash Flow is the sum of business net income plus any owner perks and any non-onward going expenses.
A multiple is prescribed by a 20 question, 100-point parameter ranking system that is used to analyze the current business health. Each question is based on a scale from 1 to 5: 1 being low, 2 below average, 3 average, 4 above average, 5 high. The average of the responses sum is the business’ prescribed multiple.
For this business, a 2017 Cash Flow was used with a prescribed multiple is 2.9. With this information, the computation is as follows:
$292,970 x 2.9 = $849,613
The Fair Market Value found above positions the business List Price at $850,000.
Purchase Price: $850,000
10%Buyer Down Payment: $85,000
20%Seller Financing: $170,000
70%Bank Loan: $595,000
Seller Financing 6-year term at a rate of 4.50% equals a monthly loan payment of $2,699.
Bank Loan 8-year term at a rate of 6% equals a monthly loan payment of $7,819.
After business expenses and loan payments, a buyer with a 10% down payment of $85,000 would retain a profit of $166,757, which results in a 196% return on investment in the first year.
A lender is required to have a minimum 1.5 coverage ratio for any business loans extended. At a proposed Purchase Price of $850,000 with the terms listed above, the coverage ratio is 2.32.
Please note that the decision of whether to extend a loan on any sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available.
Offer Price: $
% Buyer Cash Down at Closing: $
% Seller Carry Back via Promissory Note: $
year term at a rate of %
% of Purchase Price secured by Buyer and Seller
Total Bank Loan Need: $
% of Purchase Price
Desired Loan Type:
Desired Bank Terms: year term at a rate of %
Total Business Assets, Inventory, and A/R: $
Total Undercollateralized Loan: $
|Monthly Payment to Bank:||$|
|Yearly Payment to Bank:||$|
|Monthly Payment to Seller:||$|
|Yearly Payment to Seller:||$|
|Total Monthly Debt Service:||$|
|Total Yearly Debt Service:||$|
Fixed Charge Coverage Ratio
The bank will require a minimum ratio of 1.5 to be lendable.
2017 Cash Flow
|Annual Debt Service:||$|
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
2017 Cash Flow
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
|Document Title / Description|
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