Health care companies represent a major force in the economy in California. Merger, acquisition and partnership activity in this sector has been strong, and a survey of health care companies showed that industry players remain very interested in exploring or completing new business deals. A 2018 survey conducted by HealthLeaders Media revealed that 71 percent of respondents are planning for expansions and partnerships over the next three years.
An executive at the Methodist Health System identified regulatory shifts and reimbursement changes as motivating factors behind many of these business deals. In addition to health care entities grappling with government-controlled factors, new players, like Amazon, are entering the health care market. She said that health care companies must adapt to competitive changes that will result from the purchase of Health Care Advisory Board by Optum and Aetna by CVS.
According to the survey, 36 percent of companies expected to look for merger or partnership opportunities or actually complete deals that are already underway in the next 18 months. The dollar value of emerging deals is high as well, and 73 percent of responding organizations anticipate creating deals that involve even higher values in the near future.
When a company owner wants to generate competitive advantages or new opportunities through mergers and acquisitions, he or she generally seeks legal advice. An attorney could assist with due diligence as potential partners are vetted. A legal review could inform someone about a company’s debts, physical assets, market share and intellectual property. A lawyer could draft initial memorandums of understanding between two companies and confidentiality agreements as the parties study each other’s operations. Going forward, an attorney could advise an executive about how to structure a deal to limit liabilities and reduce the possibility of disputes and litigation.