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Opinion: Lessons learned in recent M&A activity

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At some point in the life cycle of a business, most owners or board members will face an exciting and difficult crossroads: whether to merge with another business, acquire another business or be acquired by another business.

The rule applies across industries, from retail to restaurants and, yes, health care. Stay open long enough, and merger and acquisition opportunities will present themselves.

For decades following our establishment as a Community Mental Health Center in 1977, Burrell Behavioral Health focused largely on our seven-county southwest Missouri service area. In that time, there was significant M&A activity in the wider health care industry, which continues today. Hospital and medical systems are constantly looking to take advantage of financial and workforce scales and to compound their influence with government and payer sources alike. When executed properly, this leads not only to thriving systems but also better, more accessible care for patients.

The M&A wave for behavioral health care soon followed, sparked by the 2014 Excellence in Mental Health Act, co-sponsored by Missouri Sen. Roy Blunt. This legislation fundamentally changed the way CMHCs in eight states – including Missouri – are reimbursed, and therefore the level to which they can invest in expansion, workforce, technology and programs for the people they serve.

Since I joined Burrell as president and CEO in 2017, we have made it a company strategy to seize this moment in history and become active in the M&A space, completing no fewer than five true mergers or acquisitions with companies of various sizes and scopes. These partnerships each presented significant expansion opportunity and meaningful community impact for all companies involved.

We continue to learn much about how these activities affect our clients, our team members and the way we do business. The following are some lessons we’ve learned – and are still learning – through this process. And while the experiences of a large behavioral health system may seem like apples and oranges compared to those of, say, an independent restaurateur looking to expand, I think you’ll find many of these concepts are universal.

  • Be strategic from the start. Growth for the sake of growth is a recipe for frustration. Leaders should always keep two lists: one list of companies they feel would be a good fit to approach for an M&A conversation and one list of companies they would be willing to talk to if approached. Clarifying even hypothetical company goals will make initial M&A conversations smoother.
  • Communicate (even if there’s nothing to communicate). Particularly in the due diligence and evaluation stage, and in the period immediately following finalization of a new M&A, there isn’t always a lot of clarity we can give our teams. It’s important to acknowledge this and continue listening to questions, urging patience and encouraging open minds.
  • Share the vision – on repeat. Our teams, particularly our leaders, will experience some short-term pain for long-term gain as they add the work of optimizing a new partnership with the day-to-day work they already are responsible for. Vision is what will win the day. Staying true to and focused on your company’s “why” – and your mission to serve, treat, feed or sell to more people – must be the constant thread at every meeting and in every e-mail you send.
  • Own the messy parts. There are always going to be bumps in the road: unforeseen delays and hiccups, uncertainty among staff, questions among the customer base. The goal should be to smooth these out as quickly and transparently as possible on the individual, team and staffwide levels. When the dust settles and a new company emerges, your teams will be stronger for it, as long as they feel safe, supported and heard.
  • Look out for your team. Even the most successful transactions stretch everyone in the organization, and it’s essential to look out for the well-being of the team you depend on (and your own as a leader). Implementing mental health training and offerings, part of an employee assistance program, for example, are not only wise business investments but also potentially lifesaving throughout the process.

C.J. Davis is president and CEO of Burrell Behavioral Health and the CEO of Brightli. He can be reached at cj.davis@burrellcenter.com.

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