Mergers and acquisitions (M&A) describes the ways companies combine or change ownership. For a founder or physician owner, understanding the basics makes it easier to compare options and choose the right partner.
Common types of transactions
- Acquisition: a buyer purchases all or most of a company.
- Merger: two companies combine into one, often of similar size.
- Majority recapitalization: an investor buys a majority stake and the founder keeps a meaningful minority stake.
- Minority investment: an investor buys a smaller stake, usually to fund growth.
- Add-on acquisition: a company backed by a capital partner acquires a smaller business to expand.
Stock sale or asset sale
In a stock sale the buyer acquires the ownership interests of the company. In an asset sale the buyer acquires specific assets and liabilities. The choice affects taxes, contracts and liabilities, so legal and tax advice is essential.
How deals are paid for
Consideration can include cash at closing, rollover equity, seller notes and earn-outs tied to future performance. Each shifts risk between buyer and seller differently.
The process
Most transactions move from an introductory conversation and NDA through an indication of interest, a letter of intent, due diligence and closing. Read the deal process, step by step.
Healthcare considerations
Physician practices must also consider state rules on the corporate practice of medicine, payer contracts and licensing. Many transactions use a management services organization (MSO) structure so physicians keep clinical control.
Considering your options? Download KVLR Capital’s partnership criteria.