Hi, everybody. Thank you for joining us for today's webinar. Because we are just at one o'clock, we still see a number of people that are logging in. So what we're going to do is give a few more people an opportunity to join, and we'll get started in about two minutes. Thank you. Hi, everyone. I see a couple more people have just logged in in the last minute. We're going to give about one more minute, and then we will begin the webinar. Thank you. Okay. We've had a few more participants join, but I'm certainly not going to penalize those who are on time. So thanks, everybody, for joining us today. Today, we have a webinar on private equity and really approaching the issue of transactions in the cardiovascular space on both the business aspect as well as the legal aspect. And this is the first real education that we've been able to bring to you from a legal perspective regarding cardiovascular private equity transactions. So with us today is going to be Justin Hand. He's the managing director of West Cove Partners. Also, Abe Embodged, who is a partner and a director at West Cove Partners, as well as Dean Gould, who is a senior attorney with Dykema. So we're going to have a variety of perspectives from those individuals. Before we get started, I want to make sure that we're all oriented well to the platform. And so what you will see inside of Zoom webinar, Abe, if you could flip to the next slide, is this is what your screen should look like. We do have a chat feature. This is not a chat that's open to all attendees to have dialogue about the presentation. In this chat feature, you will find a link to the presentation. And so you'll see that that link to download these slides is available now in the chat. If you would like to communicate with the presenters in this case, we're going to do that today through the Q&A feature. And so we'll be monitoring that throughout the session. And towards the end of the session, we will compile those questions and we will be able to have those answered by our presenters. If there is something that seems to fit, that's worth interrupting a presenter for, that we think will then add more value to the presentation for everybody, we will do that and we will stop the presentation to answer during. So please don't hold your questions till the end, but please realize that they may not be answered until the end. There's also a raise hand button. We will not be using that in today's webinar at all. So with that, what I'd like to do is turn it over to Justin Hand to please kick us off on behalf of West Cove Partners. Gentlemen, I want to appreciate all of you being here today. And Justin, please take us away. Thank you, Joe. Appreciate everyone joining this afternoon or wherever you're dialing in from. My name is Justin Hand, Managing Director with West Cove, as Joe had mentioned. To kind of level set what we do and our experience in our own cardiology. We are an investment banking firm. What that effectively means is we represent private practice. Or in some instances, we expect to be representing some hospital groups that are considering aligning with in this market, private equity consolidators, which we will talk about the prevalence and the acceleration that has occurred in this market over the last couple of years. Effectively, what we do is we represent organizations as they embark on trying to determine if an alignment with a private equity firm is a good match for their organization, help them think through the nuances of these transactions, as we'll talk about in a little bit. How do we handle the junior partners, the senior partners, and really be your advisor towards driving valuation and making sure we're aligning you with the very best organization that will be a good fit? I'll let Abin introduce himself before sharing some additional details. Hi, everyone. Abin Bhoj. I'm a director with West Cove. I've been in health care services investment banking for a little over eight years. I've worked closely with Justin as we cover our cardiology clients, especially. What we're really proud of as an organization, I think what our clients within the health care continuum have really appreciated, is how thoughtfully we are introducing really good leaders and partnerships in these private equity transactions. We do that by spending a lot of time getting to know what our clients' interests are and motivations are towards aligning with a potential private equity firm. And how we do that on the next slide is really being focused on a few core areas. One is we exclusively focus in health care and specifically in health care services. In the last two years, about 65% of the work that we've done is in physician service sectors. And we're proud of the work we've done in cardiology that we'll talk about in the next slide. But why that's important is the private equity firms that are investing in cardiology today, the Websters, the Aries of the world, they have oftentimes invested in other subspecialties, specifically within the physician sector. So we've got a history of trying to figure out which private equity firms can bring really good experiences and being good thought partners to our clients. The second core fundamental to our organization is we focus on representing on the self side. So we're exclusively focused on representing organizations who are never conflicted with the private equity community. We're always aligned with driving value and also driving value with organizations that are a good philosophical fit. And so we don't work on behalf of private equity firms on the buy side like most of our competitors out there. The third and probably the most important fundamental of our organization is we really enjoy working on behalf of founder operated businesses or organizations in the cardiology space or physician space that are going through this for the very first time, have never received investment from an outside perspective. Perhaps the founders are still with the practice, perhaps they're not. But this is the first liquidity event that they are going through. And I think two important factors kind of tie into this. First is because it's the first time our clients tend to step into this with a lot of trepidation and hesitation around. Is this the right thing for their employees, their patients, their communities, and of course, the shareholders themselves? And so we spend a lot of time on the education side of things, spending a lot of time of one on one meetings, Tom Hall settings, oftentimes speaking with spouses of the partners to really provide education in terms of why this could be a good match for the organization and also the individual. The other part of why it's important is that we have to be much more hands on in these processes. And Abe will talk about this in a few slides, the way in which we embark on these processes to move them through expeditiously, all rooted in preparation and that preparation is heavily focused on our team's focus and experience and also being really involved in these processes at every step of the way from start to finish. And the fourth kind of core value of everything that we do, and it tags kind of ties with our tagline of investment banking with a purpose. We really want to create lasting relationships with the private equity community on behalf of our clients. So we are not a transactional focused firm. We're proud of our experience. We're proud of the deals that we've closed and the size of the deals that we've closed. But in the long run, we want to be really proud of the introductions that we make to the private equity firms and that our clients go on to accomplish the goals that they're looking for. And so we call that legacy driven or legacy created transactions. And we're very proud of that. And we think in the physician space, that's really important when you think about the importance of continuing to attract future talent and associates and recruiting at the same caliber of physicians, making sure you align with the private equity firm that shares those values is very important. Moving along, as mentioned, our core focus and what we do is merges and acquisition work. And we'll talk about the different options that are available to the attendees on the call today. But that that that it can be alignment with a private equity firm that can be alignment with a organization that is already in the sector. It also can mean aligning with the payers or management companies. But about like, as mentioned, about 70 percent of the work that we've done in the last couple of years has been in around physician services. That includes primary care, GI, plastic surgery, reconstructive, and of course, also cardiology. So we're we're we're proud of the fact that we've closed three deals in the last six months. The first was in Texas, representing ACS in line with heart and vascular partners, which is a private equity, which is an organization backed by a private firm called Assured. We followed that on very quickly, representing heart and vascular care of Atlanta in our alignment with CVUSA. At the time, that was one of their largest transactions they've done. Real formidable transaction, the Georgia market. And we're proud of last last week. We closed our third transaction, which was down on the Florida marketplace in alignment with CVUSA as well. Just not a disclosed transaction right now that will be in the next couple of weeks. So we're I think part of our a big part of our success has been our involvement with Medaxium. It's given us the opportunity to present our qualifications in settings like this. I think our other big part of our success is the fact that we've been just extremely thoughtful in the education behalf of our clients and really being there to make sure that our clients in Atlanta or Florida or Texas have an appreciation for how this can be transformative to their group for years to come. And then why this makes sense to do a transaction today. In addition, we'll be closing a deal with what we expect to at the end of Q2 or at some point the end of next month, moving fast along the East Coast as well. With that, I'll introduce Dean Gould from Dykema to give an overview of his background and also the firm. Thanks, Justin. Thanks to Medaxium as well for having me. And thanks to all the participants for joining. This is obviously a very hot topic right now and looking forward to the discussion with Westco. Again, my name is Dean Gould. I work for Dykema. Dykema is a national law firm with 14 offices across the country. We have roughly 450 professionals. We cross multidisciplinary aspects of law. We have corporate, we have litigation. But one of the key industries that we're focused on within the middle market is health care. For myself, I'm a corporate lawyer, mainly in mergers and acquisitions and exclusively in health care. On our team, we have about 50 or so professionals dedicated to health care only. And that's on the corporate and M&A side, as well as involved in regulatory and health care specific items. We have a number of other folks who specialize in other areas, including real estate, benefits, employees, employment law and all of those different specialists touch transactions. I have a specific emphasis on representing group practices, cardiology group practices included in sort of the physician practice management space. And you'll see Justin and Abe preview that physician practice management is really just the consolidation of medical practices within certain specialties, including cardiology. And so we have a lot of experience working with seller group practices, family group practices, similar to Justin and Abe, and walking them through the process because this is their first time doing this first and only time, maybe. And so we take a big approach to to handholding and explaining and really being involved in the process and not just being being a lawyer, but also being a counselor. So, you know, looking forward to this discussion, we'll touch on what the process is, where the process goes from working with folks at Westco into working with legal, because you'll start your process working with folks like Westco and then we will lead into legal and there'll be a natural overlap there. And so that's why I'll kick back over to Abe so he can tell you guys about the process with the investment banker and then they'll kick it back to me to go through the legal discussion. Perfect. Thank you, Dean. So I think just to set the context here for for everyone's benefit, just understanding private equity and its role within the health care environment as of recently. And we've been getting some of these questions more and more recently as we've looked at the current economic backdrop. But the top graph just shows the total number of private equity health care investments over the last 10 years or so. You can see that it's really just accelerated from just under five hundred and twenty eleven to pushing almost fifteen hundred last year. And then you can also see health care services of which physician practice management is a subset of which cardiology falls under has expanded greatly as the largest segment of that area. So that's all to say that, you know, private equity is entering health care services and therefore physician practice management and cardiology in a major way. And I think this also coincides with with the chart on the bottom. You can see the level of capital that's been raised. And I think one of the questions we've been getting is how is the current kind of potential recession going to impact investing or valuations? And fortunately, cardiology valuations have remained relatively heightened. But you can look at how much capital there was in 08, 09. There's about one point two trillion dollars of private equity capital available for deployment. And you fast forward to today at the end of last year, there was three point seven trillion. So you have a lot more capital chasing, you know, almost fewer transactions, really. And that's really continue to keep elevations elevated, irrespective of rising interest rates. We have seen a little bit of a come down in certain areas of health care services, cardiology not being one of them or maybe softened a little bit over the last couple of months. But in general, they're still well, well above historical averages. Slide here, if you've tuned into any of our other webinars, I think we always like to present this and keep it updated. But this just shows, you know, the nascency of physician practice investment in newer and emerging specialties. Cardiology being one of the more recent, you know, the first platform being announced in 2020 with Partners First and Varsity Health Care. And then quickly, you can see we're already up to nine different platforms and counting. And there's also many others that are either looking for their first transaction or maybe haven't closed or announced it yet. But that's a staggering number. Considering you look at some of these other specialties like GI, the first platform was in 2016. And now fast forward to today, there's eight. Well, cardiology since 2020, we've had almost 10 be created, nine. So that just shows like how quickly this is accelerated across the space. And we continue to see that accelerating. This slide is a bit of a, I think it's just a good snapshot. So, you know, we did a webinar around this time last year. And if nothing else, it's a friendly I told you so. But this just shows kind of the market environment of an overview of the different platforms that were in the market as of this time last year. I think it's actually pretty staggering when you compare that to where the market is now. And that's this. So you can just see the difference in like how filled in the map is here. But this is really, you know, kind of the current, you know, established market. You've got a number of players in different markets around the country. You can even see there starting to be overlap and significant competitive markets like Texas and Arizona and Florida. That's only going to continue. There's still ongoing deals in all of those states with various platforms. And I think there's also been some very recent major, major market developments as recently as last week and a few weeks before with the big news being Webster and CBA USA merging with Novacardia. We're still showing it separated because Novacardia is operating as a separate division underneath CBA USA. But they're working together. The impetus of that transaction being, you know, CBA USA had built this very large footprint across a number of states. And Novacardia had built quite a bit of density in Florida, which has turned out to be one of CBA USA's major markets that they want to focus on. But Novacardia has also made pretty substantial investments in a value based care infrastructure that they would like to roll out across the CBA USA platform. And so that is unprecedented to be seeing what we would call like an exit or a second bite of the apple, if you will, this early into the consolidation curve or the private equity investment curve in this space. You know, call it under two years, two and a half years. And I think that that's just continues to be a good sign of the amount of capital that's out there looking to partner with leading cardiology groups and also the amount of interest that that's there from the investor community and the options that are available for practices. And then on the heels of that transaction, U.S. Heart and Vascular, you know, they just obviously closed and announced Heart Place, a very large transaction in the Dallas-Fort Worth area. But on the heels of that, they announced that Rubicon Founders was also going to join the platform as an investor. Aerie is still going to be there, but Rubicon is going to help support the development of value based care. And so, again, you have another investor coming in. And I think part of what has driven both the Novocardius CBA USA and also this Aries and Rubicon transaction is that people have found just how much, one, how big the opportunity is within cardiology, but two, how much equity and capital it's going to take to actually develop the market in the way that a lot of these platforms want to. Because there's so many different avenues from acquisitions and partnerships to value based care initiatives, to spinning groups out of health systems, to building ASCs and joint ventures and pet CT machines and all these kind of ancillary services. There's all kind of different avenues you can take these organizations from a growth standpoint. And I think these private equity firms are finding that the equity that is needed and the capital that's needed to be able to actually scale in a significant way is going to be substantial. So you're seeing a lot of this partnering and joining out. Thank you, Aiden. When we think about the slide on the previous slide, we think we outline those as all strategic acquirers that have received investment from private equity firms. When we engage on a new client, we always tell them we should go into a process with our eyes wide open, and we should explore all the options that are available towards your organization. And we define those options as really in three buckets. We talk about two here. The third bucket is you consider a process and ultimately decide to remain independent for some reason. I think that's very rare, given the amount of effort that goes into these processes. Most of our clients that engage in this will ultimately go through a transaction. All of them have, that would represent some cardiology. But the major two considerations for practices are, do we want to align with a private equity firm that already has made an investment in a cardiology practice? The nine that Abe described on the prior slide would represent a private equity backed strategic partnership. Effectively, your practice would become an add-on acquisition towards those organizations. Or do we have the interest and the confidence to be a new platform for a private equity firm that has not yet made an investment in cardiology, and you're going to represent the 10th, 11th, or 12th organization to be competitive with the other nine in the marketplace? There are pros and cons to both. And I think ultimately a process as Abe will describe will help the group determine what's in the best interest for your own organization. But on this slide, I'm just going to pull out a few key characteristics of how you help determine what's of most interest to yours. So I'm going to skip over board control, but I'll skip over board control. But the reality is if you align with a private equity firm for the first time and you're the platform, you will likely have more participation at the corporate board than you will if you align with an organization that already has an investment in cardiology. And this makes sense because if we were to align with someone like a CBA USA in 2023, they had their board set up. They have investments, I think, in seven states as of right now. They've got physician leaders on that board. It's really tough to add an additional seat today. It doesn't mean you can't become a member of it down the road, but it will take time. When we think about the cash consideration between doing a deal with a private equity-backed strategic or being a platform, the economics tend to be very similar in this environment. And if you think through the rationale as to why that is, in all physician service transactions, there's a belief from private equity that the best way to align incentives is to ensure that your physicians and oftentimes your management team have equity or have an incentive in the organization on a go-forward basis. So it would be an assumption and honestly an expectation that your shareholders will maintain anywhere from 25 to 40% of their equity or reinvest 25 or 40% of their consideration into the business going forward. And therefore, your cash consideration in each of these instances tend to be pretty aligned and pretty similar here. External expertise. What do you, we said earlier, what's important to us is our legacy-creating transactions. We want the cash consideration to be high. Ultimately, you want your valuation to be above market. That's what we're compensated to do. But also you want to make sure you're aligned with an organization that's gonna allow for the appreciation of that 25 to 40% rollover to be much greater than if you remain independent. So we're always looking for trying to figure out ways in which we can identify the past experiences of a private equity firm and benchmark those experiences against the others in the process. So how do we benchmark the experience of someone like an Audax group, which as Ava described three slides ago has been really at the forefront of investments in a lot of other subspecialties, been in multi-site healthcare, been in GI, urology, et cetera. And how can they bring those best practices and those learnings into a cardiology practice? And how do we benchmark that against someone that doesn't have that experience? So we're always looking for what is the value add outside of capital that these private equity firms can provide to you? And ultimately, if you align with the strategic fact, if you're an add-on to a strategic acquirer, we may be able to leverage some of their back office infrastructure and management service offerings that you may not have today. So do they have a mergers and acquisition function or an RCM function that you could utilize instead of having it done externally? Those are the benefits of aligning with the organization that already has some runway and has had success and consolidation already. Equity appreciation. As mentioned, we want or you want your rollover value that 25 to 40% to grow exponentially with the help of this partner. And you want to do so in a way that's mitigating as much risk as you can, obviously. So when we think about the risk tolerance, assuming that the risk differences between aligning with someone that has had already started down the path, a CVA USA or a US Heart and Vascular Partners, as an example, they've already had some runway, they've already had some successes. And therefore you can view the likelihood of the return of equity to be certain or more certain than being the platform for a new private equity firm. However, the return of being a platform can oftentimes can outpace or be higher because your value of when you're coming in in terms of your share price is level set when you receive that initial transaction being a platform investment. So we help consider the variation and what the likely outcomes for each of these. And lastly, and I think pretty, I'd say equal across either option is access to capital. If you, a private equity firm is making investment into your organization because they believe that you have the confidence, the power and the interest to grow it to something much larger. They will be there to support you from a capital perspective to do acquisitions, invest in our stuff, expansion of an RCM function as an example, onboarding new physicians at a faster and a more accelerated pace than you've done before, expansion of PET, CT, OBL, et cetera. So access to capital seems to be or tends to be pretty similar between these two organizations or two types of options. But what isn't always consistent is the private equity firms themselves and ultimately the amount of capital they have to invest in these organizations. And so to Abe's comment before, that's part of the reason why we think Aries Capital brought in Rubicon was not that Aries doesn't have the capital to support the investment but they have more capital when they have another private equity firm to accelerate that growth in the organization to be competitive or to be on the offensive for all the activity that's happening in this marketplace. Moving along real quickly, I think Abe's gonna go into detail as we'll be in on what a process looks like but we come from the mindset that if you have spent the time to create an amazing cardiovascular organization and you are at this inflection point where you are considering whether an alignment with a private equity firm is good for your organization to remain private and to maintain your dominance in your geography and to continue to attract high caliber physicians and providers and management team, this shouldn't be the time that you shortchange yourself in terms of stepping into this process. When we are in a position where we're negotiating against the private equity firms that we've described, they do deals all the time. In some instances, dozens or hundreds of deals every single year depending on the size of the private equity firm in general, not necessarily within cardiology. You wanna go in and be coming from the offensive position. You wanna be prepared. You don't wanna leave things to chance. So while some of our competitors in the marketplace think that you don't have to do a quality of earnings or you don't have to build a data room or you shouldn't go through, you shouldn't issue a purchase agreement, you're putting yourself at a disadvantage to all the other cardiology groups that are in market right now that are doing what I just described. So we'll go into detail a little bit on the value of a quality of earnings. We want on your behalf to put into market what is the most defensible accounting position that we can have on behalf of your practice and do so in a way that's highlighting maturity adjustments, ramp up of physicians, expansion on new location opportunities, conversion for pet CT, our ability to defend those things when we're negotiating against a buyer. We have so much more credibility when you have a third party quality of earnings firm that's issued a report on your behalf. Same thing around preparing your shareholder base for the process itself, being available for calls, building a virtual data room and having everything available so that when we're managing a process, we can hopefully be in a position that the longest we're granting exclusivity to one potential party is three to four weeks maximum. 60 to 90 days, we should never give that amount of time to an investor because we will lose leverage with the other parties that are interested in the process. So we are of the mindset that we should always spend as much time as necessary in the early part of the process to prepare our clients to step into this, meet from a logistical standpoint, from an informational perspective, from an accounting perspective and from a shareholder perspective in terms of education. Everyone's enthusiastic about this. Doesn't mean everyone's ready to sign a deal, but everyone has an understanding of what a deal can look like so that when we actually launch into a process, we can do this in a way that's expeditious and we can get this closed with competition running all the way through. And A, we'll talk about now how we go about doing that and how it's allowed us to get through our processes in the three, excuse me, two of the three instances of the deals we've closed in under six months from engagement to wire transfer on behalf of our client. Listen, I think the general purpose of discussing this is this is really how we assist our clients in figuring out who the right partners for their organization along the way. And I think it ultimately results in a couple of things. One, the best transaction you're going to get, but two, also you find who the true right partners for your organization. So this is just a timeline of generally how we think about a transaction process. We break it into two steps, which is the preparation phase and then the marketing and closing phase, which we'll talk about on the next slide. But this first step of the process is really, think of this as like pre-marketing or pre getting ready to have discussions with potential partners. And so there's a couple key components to this. The first being, as Justin described, the quality of earnings analysis, which is spending time with a third party accounting firm alongside with us and really getting our hands around, okay, what is the true adjusted EBITDA of the organization? And what investments have we made in the business today that we want to see reflected in the valuation going forward? We can do that analysis, but having an unbiased independent third party that does that, it allows us to be in a position with a potential partner down the road who ultimately has to do their own QV or quality of earnings before they make any investment. If they disagree with adjustments that are in our quality of earnings, they have to have a really good accounting reason as to why. And that we found to drive tremendous amounts of value in these processes, as well as just speed, because this is one of the more complex exercises you'll go through in a transaction process. But that being said, if you wait to do that until you're either under a letter of intent with your potential partner or trying to do it in the middle of like a transaction process, now you're kind of fumbling through that quality of earnings in the midst of other negotiations that are going on. Doing this upfront allows us to really kind of plant a flag in the ground, get our ducks in a row, make sure everything's being presented in the best light possible. In conjunction with that, we build what we call in the industry a SIM or confidential information memorandum. This is a 50 to 70 page kind of document that outlines the organization, the past, the present, the future, growth opportunities, the infrastructure, all of that. And that includes a five-year projection that we build in conjunction on top of doing the quality of earnings analysis. And then we also populate a virtual data room at the outset of the process, which I think historically, once you sign a letter of intent a potential partner would share with you an Excel sheet with, I don't know, a hundred pages in it that asks for all the information about the organization. And we bring that to the front of the process. That way, when we get into actually dialoguing with potential partners, we have all the information stored in a coherent manner, which allows us to put more pressure on them as they're reviewing the data and information to be ahead of any potential questions or issues that'll come up and put the onus on those parties to review that information and do their due diligence prior to signing a letter of intent or granting someone exclusivity, which we'll talk about in the next phase. But once all of that is put together, comes together in a comprehensive document, and then we would launch the marketing process. This is the next stage in terms of how you get from launch and discussions with potential parties to actually signing and closing a transaction. Starts with executing non-disclosure agreements. We distribute the SIEM and the materials as well as the quality of earnings. And then also, I think a difference in how we do this, you know, we work with counsel. Part of the reason we wanted to have Dykema and Dean on the call here today, we work with our clients and their counsel to actually put together drafts of the key agreements, generally the purchase agreement. Sometimes we'll take a stance on what we wanna see in employment agreements as well. And we actually put those in the data room and we review kind of unified markups from potential parties on behalf of our clients. That way, again, we're not taking the draft of the purchase agreement that a potential buyer gives us when they're ready after they've signed a letter of intent. We're having them respond to ours and then we can compare and contrast how different parties respond. Through those first couple of weeks of the process, we're answering a lot of the questions that potential partners have about the opportunity. And that leads up to an indication of interest deadline. That indication of interest is kind of the first time you're getting an indication of value from the marketing. Usually it's two and a half to three weeks when we actually distribute SIMS. That is a key part of the process. And many times we're getting 15, 20, and sometimes this is more, in some instances more indications of interest on behalf of our clients. And that can come from private equity firms, strategics that are in the market, that are groups that are already backed by private equity, payers like UnitedHealthcare and Optum have been active in some of these processes and then others like multi-specialty or primary care groups. But we bring all of those to that point. And then we take that and that's really where you narrow down your field. And so if we got 20 bids, perhaps we say, okay, these 12 are interesting, or you can increase or lower the number as much as you want, depending on kind of cutoffs and thresholds and things like that. But that's where we actually grant them access to that data room that we've put together in the early part of the process, where we share that purchase agreement as well as have meetings with all of these groups and allow them to continue to do their due diligence on the opportunity. We're pushing them to do as much of their work upfront as possible, including the quality of earnings analysis, any regulatory analysis they need to do, so that when it comes time to get their final bids, which is a bit after the meetings, we want the parties to show up with fully negotiated and in many cases, responses to the purchase agreement. Quality of earnings has been done in a lot of instances because all they had to do was review the quality of earnings we put forth before. And so when you get to this point, we're in a position where we can grant someone exclusivity for three, four weeks and get to an actual signed purchase agreement as opposed to, I think what's often common is granting someone three months of exclusivity, which at that point, there's an emotional investment that goes into these processes. It's really hard to approach the market. And if you spend three months in diligence with someone and the deal doesn't happen, when you try to go back and approach the market, it's very hard to re-engage interest. So with that, I'll turn it over to Dean to talk a little bit more about the legal nuances of these transactions as well. Thanks, Dave. Yeah, great segue there. Going from the business side, the investment banker side over to legal. And just for those out there listening, the relationship between investment banker and law firm is very, very important because we work together. We're both advisors and advocates for you. And sometimes our roles do overlap. And so we'll talk about the equity component that Justin spoke about. We'll talk about the bid draft that Abe spoke about and how that all factors into legal representation. Before we lay that, before we discuss that, I wanted to just discuss the groundwork of we have private equity really excited about all physician services, but especially right now it's cardiology. And how do we go about executing that thesis for these private equity investors? Because as we all know, private equity investors aren't our doctors. How do they get access to that EBITDA, these practices, those cash flows? Once we lay that groundwork and we'll go through a structure chart, we'll then discuss the transaction process from the legal side, and then overall discuss the role of a lawyer in a transaction. Because I think that, especially for founder-owned doctor, founder-owned groups like many out there, you don't know what a lawyer is supposed to do, right? And what is their role? Where do they provide value? And so happy to discuss where lawyers are involved in the transaction and how we can ultimately provide value. So from a legal perspective, we have in this country a doctrine that is a public policy measure designed to protect patients and to allow doctors to maintain clinical autonomy and clinical decision-making. And that's called the corporate practice of medicine. I'm sure many are aware of it. And so it's a state-specific law, but the idea is that there can be no non-professional, non-clinical ownership of medical practices or health systems. It's very state-specific, but the idea is we want doctors to maintain control of that without the outside influence of corporations and private equity, right? So that's kind of conflicting with this ideology of, okay, private equity is coming in and buying these medical practices. How do we balance those two? And so we'll go into a discussion and maybe if you don't mind going to the next slide, how do we factor in this corporate practice of medicine doctrine where we want to maintain clinical autonomy, cardiologists to do what they do well and to not be influenced by outside influences of corporate ownership? And so on the next slide, it's gonna show you a very, very simplified structure chart on how we get doctors involved. And it involves, maybe you've heard it, an MSO, a management company, a medical services organization, an MSO, or management services organization. And so if you don't mind going to the next slide, this is a very, very simplified chart. It doesn't factor in ancillaries. It doesn't factor in ASCs. All of those are obviously important aspects of businesses for cardiologists. It doesn't necessarily include your relationship with hospitals and health systems. So this is a simplified structure And this is a structure not unique to cardiology. It's how all those position practice management groups are structured that Abe showed the history of all the different specialties and how they've consolidated. This is how they've structured them in a way that allows for private investments into the essentially the EBITDA of cash flows of a medical practice. So if you take a look at the chart, if you look at the green side first, that's the lineated between clinical and non-clinical. And we start with the bottom right, we start with physicians, right? Many physicians on this call are listening in. You guys provide clinical services to patients. Patients then through insurance, through Medicaid, through Medicare, through private pay, they then for those services pay in medical practice. So money into medical practice, medical practice uses that money historically to pay their expenses, pay their employees, pay their physicians. And at some point they've paid all their expenses and there's money left over. And so there's that green box to the top left right there that shows the physicians owning the practice because they have to, nobody else can own them. And so what was ever left over would be taken as some sort of profit from by the physicians. That's before private equity comes in on a very simplified scale. Okay, so now I'm a private equity investor and I want to access those cash flows. I want to access that either. How do I do that? Well, I'm going to pay for it. And Justin and Abe spoke about the increased valuations, the acceleration of the marketplace. What am I buying? What are these investors buying from me if I'm a group practice? And so folks like Aries and Webster, they create a management company. They create an MSO, a management services organization. And they will come in and they've through that company, they will buy the non-professional aspects or non-professional assets of the medical practice in exchange for cash and rollover equity or that reinvestment Justin spoke about, which is serves to align incentives. Okay, so you've bought those. I have now reinvested. So you look at the top right, there's physicians and private equity investors are now the investors within that holding company, which is the blue box. That's all the private equity side of it. And so that's great, right? You're the doctor, you've gotten paid, you've invested in a company, but now how do we get the money from the medical practice up to the management company when I can't own it, right? So there's that line, that dotted line right in the middle with three agreements next to it. And those are the most critical documents within the structure for any type of physician practice management. So that administrative services agreement and different law firms call them different things. Sometimes they're called business support agreements. Sometimes they're called management services agreement. They all do the same thing. After the transaction is over, the buyer that bought your company, they're going to provide all the non-clinical support to run your practice. You will continue to operate the medical side of it, but you no longer will be involved in billing and coding, collecting, all the things that come with just running the business. You're now only focused on medicine. So that buyer is going to agree to provide you that service in return for a fee from you. And that fee has got to be fair market value. Different states have different laws on how you can structure that fee. But ultimately that is how the management company where you, the doctor, will be invested in will be able to receive the benefit of the medical practice, not just yours, but all the other medical practices and cardiology practices that your buyer goes and acquires. And after they've conglomerated that, they've consolidated it, then as Justin mentioned, you're going to have a second bite at the apple. You're going to have an exit and somebody's going to come in and buy this management company. And you're going to be able to realize your investment because you only got paid say 70% in cash and 30% in equity, sometimes called rollover equity, a reinvestment, all interchangeable terms. So I just wanted to lay that groundwork because I think that sometimes there's a lot of numbers thrown out there. There's EBITDA multiples, there's private equity, but what does that mean? How does that work? Not just at the transaction, but also at a post-closing and what is that relationship between MSO management company and medical practice? Okay. So with that in mind, we're then going to talk about where does the lawyer fit into this process that Justin and Ava have led you on, right? You've engaged with West Cove. West Cove has got you going through an intense sell side Q of E. They're figuring out what you're worth and they're going through this very particular process to maximize your value. When do the lawyers get involved, right? Ideally, from my perspective, we'd like to be involved as early as possible. Ava and team are going to open up that data room. We want to be involved in that data room population because not only is that data room going to include the financial information, your financial statements, your tax returns, your production reports, and things like that. We want to fill that data room up with all the legal side as well. And we want to get in there early because we also want to identify what we, from our experience, representing buyers and also representing sellers, what are going to be items that these buyers are going to focus on, right? Nothing out there is going to stop them from doing the deal. It's just a matter of time, right? The earlier we can get to something and address it, fix it, understand it, the less that will delay any type of transaction process. So we're going to discuss due diligence and what buyers are looking for. And it's all lawyers are doing is trying to allocate and mitigate risk amongst the parties. We'll be involved. We should be involved, lawyers, in the negotiation of the letter of intent and then also in the negotiation of the bid drafts, right? That's all designed to give the seller as much of an advantage as possible. And as a market as hot as cardiology, we have leverage as the sellers. And so we can submit a bid draft and have the buyers go off of that document. Ideally, if you're representing a buyer, you want to be in charge of that document. But in this marketplace, it's the sellers that are leading that charge. Once a letter of intent is signed, and we got that exclusivity Abe spoke about for three to four weeks, then the buyer is going to conduct their quality of earnings. They're going to conduct their financial due diligence and legal due diligence is really going to start in earnest. And we'll discuss that more in depth of legal due diligence, very similar to financial due diligence, but obviously just on the legal side. Then we will discuss some of the key items in these definitive agreements, the purchase agreement, the equity documents, and the employment agreements. Okay. On the next slide, you'll see, we're now involved pre-letter of intent. We're working closely with Westco. We're working closely with the folks that you're at your group practice. And we want to understand everything there is to know about your practice, because we want to be able to get ahead of any issues, right? And so that includes compliance with STAR, anti-kickback and fee splitting, right? Obviously, cardiology has lots of ancillaries. There's lots of ability to do procedures in different outpatient settings now, depending on state law. So we want to be able to understand the inflow and outflow of money amongst those ancillaries. We want to understand your compensation structure with the doctors and the providers. Is it a compensation pool? Is it based on market use? What is the compensation model? And these are not gotchas, right? These are not designed for us to be, hey, this is wrong. This is bad. We want to be on your team. And it's a team-oriented approach to fix it if we need to, but ultimately just to understand it so that when we have a buyer ask us, we're not having to play catch up. With PET scanners, there's obviously some NRC compliance we have to be involved with. We have to figure out who owns that license and what the process is going to be to answer that, because that is a government-related process. And then there's billing and coding as well. The buyer's ultimately going to perform a chart review, but we have the experts here that can help you understand whether or not, in your state specifically, whether or not we're billing and coding appropriately based on where these procedures are being performed. From a non-healthcare side, early on, and Abe knows all too well, getting out ahead of tax issues is a key consideration because it absolutely affects the bottom line. So in that structure chart I showed you, we didn't include any type of tax status because it's just a generic slide, but if it was designed specifically for a group practice, we would certainly want to know, is that group practice taxed as an S-corp? Is it taxed as a C-corp? Is it a partnership? And we don't need to get into the details of tax law, but depending on the classification of that entity, we then need to make decisions and figure out how to tax-efficiently structure the transaction. And that's why we're involved in drafting the bid-draft, because not only will we draft the bid-draft, but we will come up with a transaction structure that we expect a buyer to utilize because we want to make sure it's as tax advantageous to us. We'll review all of your governance documents. We want to make sure that if you have a large group practice that everybody's on board, and if they're not, do we have the ability to have the votes to make this transaction happen? Not ideal, but we certainly want to make sure that we don't have a situation where we get far down the road and one doctor then says, I have to approve this and I don't approve it, right? So we'll review those governance documents just to make sure that everybody's aligned there. Most group practices are going to have some sort of retirement benefit plan, a 401k plan or a pension plan. With those, we have to be mindful of how those are terminated, assigned, integrated with the buyer. And so our employment benefit folks will be able to analyze that and determine what's going to be the best way to do that. We'll get in touch with your TPA, your third-party administrator, to figure out what is going to be the most efficient way to handle that transition. We'll review all of your employment agreements, but mainly we want to make sure that if there's any independent contractors with the organization, are they properly classified? It's a smaller issue, but something that if there are a lot of independent contractors involved that aren't by state law considered independent contractors, something that we might want to rectify or fix or just be able to explain to the buyer when we get there. So that's pre-letter. That would be before we've chosen a buyer. That's us working closely with Abe and Justin to make sure that we understand from the legal perspective, what is you are as the seller, right? And the next one is, okay, now the other party's involved. The buyer's involved. They've taken a look at our data room. They've given us what's called a due diligence request list. And that request list is going to be fairly extensive. And it's going to, because you've got to think from the buyer's perspective, they need to understand and the diligence, the reason for it is that they want to review, assess, and mitigate everything there is to know about your business. And so they're going to ask for documents, legal documents. They're going to ask for your loan documents. They're going to ask for your leases and employment agreements and your benefit plans, your payer agreements, all your related third-party insurance. And it's not, again, the buyer is not trying to get you, right? They're going to have young enterprising lawyers who are going to ask lots of very pointed questions. And all they're doing is they want to be able to go to their client to tell them, hey, here's the risk with going through this transaction because of this diligence that we found. Will it affect price? Unlikely. Will it affect how the parties and the lawyers negotiate the transaction documents? Perhaps. Because as we get into the next discussion, we talk about what is the purchase agreement? What is the purpose? All the lawyers here on both the buyer and sell side are doing is trying to allocate risk between either party. If it was up to the buyer, they would put all of the risk onto the seller, right? Vice versa too, right? So there's a delicate balance within this transaction of who has the risk for what, right? What is the liability? What is the cap on that liability? And so diligence is an exercise to help the buyer understand where the risks are within this group practice. Within due diligence, you're going to then be able to understand the representations and warranties. We'll get into that when we talk about the purchase agreement. And then you'll have certain disclosures that you're going to have to make about your practice, right? Two years ago, we were sued for this. Three years ago, a former employee was disgruntled and said these things and made this accusation. We need to know about those and we need to tell the buyer. And none of these things are going to scare a buyer away. The market's too hot for that, but we will then have to disclose it on what's called a disclosure schedule. So that process is, how do I describe this delicately? It can be laborious, but at the same time, we move quickly. Dichen has handled this many times. We've worked closely with folks like Abe and Justin on the banking side to make sure it's as efficient as possible. And ultimately, the right buyer isn't going to overburden anybody with due diligence. And Abe and Justin know those right buyers out there and can talk from experience on who is unnecessarily asking questions. But we'll be there helping them make sure that the process isn't overwhelming. Okay, so now we've done diligence. The buyers examined everything. And now in our purchase agreement that we've submitted, maybe even our employment agreement that we've submitted, what are the negotiating points within those documents? So on the next slide, it shows the three key agreements, the purchase agreement, the equity documents, and the employment agreement. Within the purchase agreement, risk allocation, right? Allocation between who is responsible for what, who bears the risk of this, and that's handled through representations and warranties. You're going to tell the buyer, hey, I haven't had any litigation in the last five years, except for this. All of my employees are properly classified as employees. I haven't had any healthcare or board complaints, medical board complaints. And to the extent those are true, no issues, right? It's to the extent they're not true. And if they're not true, and they lead to a loss, well, then we have to figure out within the documents who is responsible for paying for that loss. Restrictive covenants. So they're paying you consideration, and so they're likely going to include some sort of covenant not to compete. And so that's part business, part legal discussion on what is the scope of that? How long is it? How many miles is it? What's the radius? Does it include states? Is it only specific to certain subspecialties of cardiology? Is it cardiology generally? Is it medicine generally? So those types of negotiations are occurring within all three of these agreements will include a non-compete. Not really particular yet to cardiology, but at some point there might be an earn out discussion. Increased performance over time will result in a higher payment. And we're running a little bit low on time, so I want to make sure I get on this. Justin mentioned that we have this reinvestment concept. We want to align incentives. And that's absolutely true. We're going to give you cash. We don't want you running off to Aruba with it. We want you to be invested into this company that just bought you. And so we're going to give you some rollover equity. At the same time, though, what happens if you do go run off to Aruba with the money and don't work back, or you compete with them, or you show up to work in a way that you do bad things, bad actors? Can the buyer then protect their investment by then taking back some of your investment? And the answer to that is likely. The buyer wants to protect their investment by giving you the carrot of the cash and the equity, but also a stick to say, hey, you need to be a good corporate citizen. You need to be following our expectations here. And if you don't, then we have the ability to claw back your equity. It's not like an automatic thing. Hey, you showed up to work late. I'm going to buy back your equity. It would be a long, drawn out process. But at the same time, those are in the documents, and they're designed to help keep doctors continuing to work and continuing to be good corporate citizens. Depending on the last couple of slides here, Abe, post-transaction, right, we have that management relationship between the buyer and the practice. You have an employment agreement. Maybe for the first time in a while, these doctors will have a true third-party employment relationship, perhaps an earn-out unlikely in cardiology. As I said, good corporate citizen. We want to make sure you're a good actor, because if not, you run the risk of that rollover equity being taken away. There's the second liquidity event, which Abe spoke about is already happening, which is incredible in the market. And then obviously, there's opportunities to help grow your practice. And with the access to capital, you now have the ability to go to your partners to perhaps grow an ASC, to grow to additional locations and into different markets. And so those things can occur post-closing. And lastly, I'll just leave you with the time we have. Where do lawyers fit in, right? Where do we fit into the transaction? Sometimes, unfortunately, lawyers can be seen as an impediment in transactions. And I pride myself in our law firm, Price and Santa Juana, on making sure that we're good partners, that we are not an impediment to a closing, that we are truly there to help. We're there to explain. It's the first time we understand that. And then obviously, we know market expectations. We've done this enough to know who the players are, what's market, and that that's helpful in these negotiations. Lawyers can have specialized expertise. You're going to come to Dykeman. If you have a real estate issue, we have that. If you have a tax issue, we have that. You don't have to go and start asking for different legal advisors. It's handled all in one law firm. So I don't know if we have time for a question. We only have a minute left, but I really appreciate everybody's time. And hopefully, it's going to be a discussion format. Thanks, Justin and Abe and Dean. It was just phenomenal to hear all of you provide a lot of clarity and context around what's a very intimidating and very new subject for most people in cardiology. It's not something that we all do every day. And so you've laid it out in a very simple way for us, and I appreciate it. I also know that we try to end these with Q&A. We don't have enough time. I know you guys took us right up to the end of the hour with great content. So what I'd like to do is at least remind people that we can have your questions answered. You can type into the Q&A box that's at the bottom of your screen, and we'll make sure that we keep the webinar open for just another minute or two. And if you type into that Q&A box, we will then have one of the presenters respond to answer your question that way, so that at least we can still do it. I know it's really fun to do it synchronously, where we can then learn from each other and our questions, but we do want to be respectful of everybody's schedules. So we'll leave the webinar up for just another minute. Feel free to type your questions into the Q&A, and then we will be able to follow up by email with everybody. Other than that, we will end the webinar, unless Justin or Abe, there's anything else you'd like to say before we close out? No, thank you everyone for the time. We really appreciate it. Reach out to us individually, or we're happy to all get on the phone as a group and answer any questions anyone might have as well. Thank you, Abe. I appreciate it. Wonderful. Well, thank you everybody for dialing in. Enjoy the rest of your afternoon or late morning, depending on where you are, and have a wonderful day. Thanks. Bye-bye. Thanks, everyone.

private equity transactions

cardiovascular space

healthcare

physician practices

quality of earnings analysis

information memorandum

virtual data room

private equity partnerships

due diligence

post-transaction phase