Healthcare merger and acquisition deals can result in a final product that better serves its community. These deals can preserve or increase quality care while also making for a more efficient product. But sometimes these deals face hurdles. In some cases, the hurdles are easily managed, in others they can mean the end of negotiations.
What can cause problems with this type of deal?
To move forward, a successful merger and acquisition deal generally requires the approval of the shareholders. If the necessary majority approve the proposal, the acquisition goes forward, and the shareholders receive the agreed upon compensation.
But things do not always go according to plan. In some cases, shareholders may not agree with the proposal. In a recent example, shareholder Land & Buildings announced plans to vote against Healthcare Realty Trust’s acquisition of Healthcare Trust of America. The shareholders claim the move would have a negative impact on the healthcare group’s valuation and that the process leading up to the deal was flawed. This could slow down or even defeat the proposed acquisition deal.
The shareholders are not the only party that could derail a healthcare deal. In another example, the United States Federal Trade Commission filed an administrative complaint and lawsuit to stop a deal that was moving forward in Utah. The agency pointed to concern about a potential monopoly and argued the merger would not be in the public’s interest. If the government chooses to move forward with this type of claim, it may then move to a formal hearing before an administrative law judge — potentially derailing the deal.
How can I reduce the risk of these types of hurdles when navigating a healthcare merger and acquisition deal?
Careful due diligence can help. It is also wise to have an attorney experienced in this niche area of healthcare law help guide you through the process.
Attorney John Rivas is responsible for this communication