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ISO consolidation matters, and it won’t stop soon

par Gus Iversen, Editor in Chief | August 07, 2015
Business Affairs CT MRI X-Ray
From the August 2015 issue of HealthCare Business News magazine

Although Oxford Instruments Service is owned by a European company, it is not active in the European ISO market. Instead, it conducts business solely in the U.S. market, where Sloan says ISOs are a more evolved segment of the industry.

Crothall, which is owned by a U.K.- based company called Compass Group, purchased a Texas-based company called Crest Servicesin 2013. Sloan says that was a decision made in the interest of bulking up their presence in the U.S., where the market is more mature.

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"The biggest hurdle to creating the European market is creating an effective supply chain — which ReMedPar provided for the U.S. market in the ‘90s — but in Europe they still don’t have the one-stop shop for all their third-party equipment needs,” says Sloan

Tidy bookkeeping and the acquired company

For Alvarez, acquisitions are a multi-stage process. He says the first step is building trust between the two companies. The second phase is negotiating a deal. Due diligence follows as phase three, in which all the financial details are processed. After that the unified company gets to work on integrating its businesses.

Each company offers a unique set of challenges in terms of what its owner’s goals and objectives are when considering an acquisition. It’s crucial to have paperwork, the financial documents and contracts, neatly organized in order to determine the value of a company and the long-term viability of contracts.

Ideally, those documents should be reviewed and audited before moving forward. Biddle says acquisitions put a lot of stress on all parties involved. “People wonder, will they keep their jobs? Will they start wearing more hats? It impacts a lot of dynamics — particularly for the company being acquired,” he says.

“One acquisition I was a part of became bumpy and was bumpy for quite a while in large part because things were not made clear enough on the front end,” says Biddle. “Lack of communication and lack of documentation, those things lead to a bumpy road.”

The acquired company should also be prepared to offer a concise narrative, over viewing the company and its values, according to Fall. That means articulating its mission statement, goals, financial projections, head count, how long people have been with you, what their expertise is. “We put together a 100-day plan that covers everything from finance to IT, to HR, to operations, to sales and marketing – all those things – and we assign teams to them.

Typically that team will include members of both the acquiring company and the target company,” says fall. When acquisitions happen, it isn’t only the two parties involved that take notice. According to Biddle, other ISOs are likely to be looking at the amount of money changing hands, and also asking themselves how it will impact them and the ability to compete. “It depends on who you are and where you’re at, but it can make you extremely uncomfortable,” he said.

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