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 [email protected].

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 protected].