What are the benefits of a minority-equity acquisition versus the historical majority-equity model?
The core benefit of a minority-equity acquisition is that it allows the physicians to continue to hold a majority of the interests in the venture, which is good for the longevity of the venture. The core downside to the physicians is one receives less in pricing in a minority-interest transaction than in a majority-interest transaction (i.e., 6 to 8 times earnings). Thus, there is a disadvantage in pricing when selling a minority-equity position versus a majority position. Also, it is the only time you can ever sell for 6 to 8 times interest. A minority-investment option does not provide the same amount or liquidity in exit value. 3. Is there an increased interest in ASC management arrangements between physicians and hospitals? If so, what are the benefits and/or risks involved? There is muted increased interest in ASC management agreements. These are often driven by the built-in reimbursement advantage that hospitals enjoy. In essence, hospitals have a lot more cash to play with in or
