FTC, DOJ and HHS Extend RFI on Private Equity Control in Health Care Markets
The Federal Trade Commission, the Department of Justice’s (DOJ) Antitrust Division, and the U.S. Department of Health and Human Services (HHS) are extending the deadline by 30 days for the public to comment on a tri-agency Request for Information (RFI) examining private-equity and other corporations’ increasing control over health care markets. The new deadline is now June 5, 2024.
The Federal Trade Commission, the Department of Justice’s (DOJ) Antitrust Division, and the U.S. Department of Health and Human Services (HHS) are extending the deadline by 30 days for the public to comment on a tri-agency Request for Information (RFI) examining private-equity and other corporations’ increasing control over health care markets. The new deadline is now June 5, 2024.
At Lanton Law not only do we understand the issues, but we provide you with timely solutions to help you make informed decisions about either an acquisition target or ways to maximize value. We counsel clients by performing corporate due diligence, provide strategic advice for growth and business strategies as well as structuring and executing M&A transactions.
Contact us today to learn more
The Rise of the Special Purpose Acquisition Company (SPAC)
With the tumultuous chain of events we have witnessed throughout 2020, we have also been hearing more about the rise of SPACs. We have been getting asked more about SPACs such as what they are and what is their role within Wall Street?
With the tumultuous chain of events we have witnessed throughout 2020, we have also been hearing more about the rise of SPACs. We have been getting asked more about SPACs such as what they are and what is their role within Wall Street?
A Special Purpose Acquisition Company or SPAC is known as a “blank check company.” This entity’s main function is to raise money through an initial public offering or an IPO in order for the SPAC to make strategic acquisitions by buying other companies.
SPACs raise money similar to a traditional IPO where the SPAC management team will arrange meetings with private equity and hedge fund players to discuss interest in the SPAC offering. These institutional investors will buy into the SPAC offering along with retail investors resulting in the SPAC’s funding. The funds are then moved into a trust until management decides how to deploy the capital.
SPACs may be a more suitable alternative way for some companies to get public funding for an IPO. For example when a private company is seeking an IPO, there are a myriad of steps to go through when dealing with the Securities & Exchange Commission (SEC).
Additionally, there are a lot of behind the scenes strategic conversations regarding how a company attains a particular stock price when it debuts on one of the stock exchanges. Pricing is important for companies for a number of different reasons including how much of a profit insiders could realize from selling, etc.
There are also institutional interests at play when it comes to an IPO. Towards the end of the process is when the company’s bank partner(s) assign a share price and then a block of shares are sold at the price to institutional investors who provide the liquidity.
After this process, the company begins the process of being traded on the open market. The problem lately with this is sometimes companies are underpriced from what underwriters believed would be a reasonable price for a company, which means that the block of shares sold to the institutional investors prior to the company’s first day on the market sold for less than the company could have realized. This means there was money oftentimes left of the table.
Not to mention that a company’s stock price goals could also be complicated by outside factors beyond a company’s control such as geopolitical risks and other headline risks that could affect the overall market the day that a company debuts. While companies do try and time these issues out, uncertainty still remains no matter what.
SPACs could offer more certainty and liquidity to companies seeking a direct listing since acquisition prices are pre-negotiated and there are less steps involved when it comes to the SEC, thus shielding companies from market volatility. Overall SPACs offer a faster timeline for companies to go public. SPAC shareholders have the ability to vote for or against an acquisition due to a SPAC’s corporate governance protocols.
As with anything new it wouldn’t be out of the question to expect for SPACs to receive additional regulatory scrutiny. SPAC interests should expect this, especially since there will be an upcoming Administration change.
At Lanton Law not only do we understand the issues, but we provide you with timely solutions to help you make informed decisions about either an acquisition target or ways to maximize value.
We counsel clients by performing corporate due diligence, provide strategic advice for growth and business strategies as well as structuring and executing M&A transactions.
If you are a financial stakeholder including a private equity firm, SPAC, hedge fund, bank, etc. we have a suite of strategic services that can help. Contact us today to learn more.
Lanton Law & Private Equity
With increasing mergers and acquisitions in both the technology and healthcare sectors, investment opportunities abound for funds and interested stakeholders. In order for these stakeholders to be successful it is essential to know the limits and opportunities within a complex regulatory landscape.
With increasing mergers and acquisitions in both the technology and healthcare sectors, investment opportunities abound for funds and interested stakeholders. In order for these stakeholders to be successful it is essential to know the limits and opportunities within a complex regulatory landscape.
At Lanton Law not only do we understand the issues, but we provide you with timely solutions to help you make informed decisions about either an acquisition target or ways to maximize value.
We counsel clients by performing corporate due diligence, provide strategic advice for growth and business strategies as well as structuring and executing M&A transactions.
If you are a financial stakeholder including a private equity firm, hedge fund, bank, etc. we have a suite of strategic services that can help. Contact us today to learn more.
Private Equity Presence Grows in Physician Practices As Well As Congressional Scrutiny
As the consolidation of independent physician practices continues, one finds that there is a new player in the corporatization of medicine. While hospitals, health systems and insurers continue to make physician practice acquisitions, these entities suddenly find themselves competing against private equity firms.
The Changing Market
As the consolidation of independent physician practices continues, one finds that there is a new player in the corporatization of medicine. While hospitals, health systems and insurers continue to make physician practice acquisitions, these entities suddenly find themselves competing against private equity firms.
Several physicians are finding themselves struggling in today’s reimbursement landscape. Whether you are in orthopedics, oncology, dermatology, urology, women’s health and gastroenterology for example, not only are reimbursement pressures much worse than in prior years, but transitioning to value based care has caused these and other physician practices to struggle with acquiring specialized personnel, new workflows and innovative technology.
What is Private Equity?
Private equity firms are backed by money from high net worth individuals, sovereign wealth funds, pensions funds, etc. that seek to invest in specialized sectors for an average return of 20% within 5-7 years. Once these firms take a majority stake in these practices and scale down costs to make the practice efficient, these same firms exit their positions after a short period while the remaining physician owners profit from the resale. The goal is to target a market, region or to create a multi-specialty practice. Besides the goal of financial returns, these firms can use their market clout to negotiate better rates and compete for more contracts with payers.
To date, there are many questions surrounding private equity firms purchasing physician practices. Do they improve patient outcomes? Do all employees within these new scaled practices work for the private equity firm? What legal liabilities exist for the physicians? Are physicians considered owners or employees in these newly acquired entities?
Private Equity Transactions Debated by Congress
Transactions such as the ones described above are now being debated by Congress. The House Ways and Means Committee is debating whether transparency is warranted by private equity firm ownership of physician practices. Should these firms have to file disclosures with the Internal Revenue Services (IRS) on Medicare payments, as well as provider rents and mortgages? Additionally, the question of whether an increase in patient surprise billing is the result of private equity ownership is also currently being examined.
How Can Lanton Law Help?
Lanton Law’s advocacy and legal services can help physician practices think about your options in this changing marketplace. If your position is not to sell your firm, we can help you with both legal and advocacy options that will assist with better reimbursement and network access. If you are thinking of selling your practice we can help walk you through your strategies. Once you sell, your practice will transition not only operationally, but also how you care for your patients. Not having complete managerial control will likely occur after the transaction so making sure that you sell to the right stakeholder is crucial. Contact us today for more information.