Becker's Spine Review

30 OUTPATIENT SURGERY PE will return. The question is, 'When?' By Eric Oliver B efore COVID-19, physician practices were closing deals with private equity firms at all-time high valuations. e virus and global shutdown derailed the PE market in the short term. Firms and sellers will need to accept significant changes to get deals back on track. e form these deals could take will be un- conventional by nature, but the amount of capital the firms are sitting on will lead firms to get deals done, albeit on an adjusted time- line, said Edgemont partner and managing director Luke Mitchell. "Deal activity is going to slow down mean- ingfully," Mr. Mitchell said. "Seller valuation expectations do not just adjust overnight, and somebody who thought they were sitting on a $100 million business three months ago isn't going to sell their business for half of that." Mr. Mitchell expects firms to be flexible when it comes to approaching new deals. He expects some specialty practices may be more open to accepting unconventional deal structures with terms that'll make up for lost valuation, but that the majority will be unwilling, at first, to adjust their expectations of the market. "[Office-based specialties] are only sellers in certain circumstances," Mr. Mitchell said. "ey always have the option of continuing to run their business, and … can also practice really late in life. ey are not going to hand those businesses over at a five-times valuation." Mr. Mitchell expects many clinician groups will wait out the re-opening period and build their valuation back up over the coming months. For deals that do close, the structure will look to minimize the damage done to valu- ations over the last two months. Some deals may even alter the ownership structure to give the clinician groups a bigger slice of the minority ownership pie and keep them in- volved in the practice longer. Clinician own- ers who take these deals "bet on themselves," in efforts to increase their valuation and sell more ownership percentages in the future. Buyers looking for an advantage in compet- itive specialties will be aggressive by looking past or "stepping over" the short term volume losses from the pandemic, knowing most businesses will return to normal volumes. n ASC anesthesia provider inks 3 deals in 1 month By Angie Stewart Melville, N.Y.-based North American Partners in Anesthe- sia has been on a dealmaking spree. NAPA provides anesthesia services to hospitals, ASCs, office-based facilities and other medical groups. The clinician-led organization has inked three deals since the beginning of May: 1. NAPA acquired American Anesthesiology, a medical group affiliated with Sunrise, Fla.-based Mednax, May 6. The transaction brings NAPA's U.S. team to more than 6,000 clini- cians and staff members across 500-plus facilities. 2. NAPA partnered with Waterbury (Conn.) Hospital to ab- sorb the practice's anesthesiologists and certified registered nurse anesthetists. Waterbury Anesthesiology Associates became part of NAPA's Central Connecticut practice May 8. 3. On May 21, NAPA announced an agreement to provide services at Monmouth Medical Center Southern Campus in Lakewood, N.J. NAPA has provided anesthesia services for 10 years at Monmouth South's sister hospital, Monmouth Medical Center in Long Branch, N.J. n Envision parent KKR sets sights on new transactions: 5 things to know By Angie Stewart D eal-making is on the horizon for KKR, the parent company of Nashville, Tenn.-based Envision Health- care, according to Bloomberg. Five things to know: 1. KKR has raised $10 billion in the last two months, signal- ing interest in more transactions. 2. The firm is ready "to not only play defense but also [play] more offense," according to Scott Nuttall, KKR's co-president. 3. Specifically, KKR is looking to provide liquidity to strug- gling companies and working with its portfolio companies to seize growth opportunities. 4. KKR's private equity portfolio fell 12 percent in the first quarter, one of many areas in which the firm saw declines due to the COVID-19 crisis. 5. Envision Healthcare has been hit particularly hard, incurring steep losses from COVID-19-related elective surgery bans. n Seller valuation expectations do not just adjust overnight, and somebody who thought they were sitting on a $100 million business three months ago isn't going to sell their business for half of that

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