Some of the hardest lessons in my career didn’t come from a bad deal. They came from a deal everyone was excited about.
I was the Chief People Officer at an organization that had built something I was genuinely proud of. We invested heavily in training our providers. It took time and energy from the entire organization, but it meant they could perform more complex procedures. Those procedures were reimbursed at a higher level, and that supported a higher level of care.
Training, culture, reimbursement and outcomes were all tied together. Then we sold.
The new owners had a different philosophy: bring in the most affordable labor.
On paper, it made sense. In practice, the reimbursement no longer supported the level of care the culture had been built around.
The model started to unravel, and the provider network began to fall apart. Nobody planned for that. The due diligence had been thorough. On the financials. Almost nobody “diligenced” the culture.
I’ve thought about that a lot since. I don’t think more time would have changed that particular outcome. What would have helped was being honest, out loud, about the culture change that was coming and what it really meant. We walked to the table excited. A lot of us walked away saying, "This isn’t quite what we thought it would be."
So if you’re considering a transaction, here’s the lesson from someone with a few scars: Whatever you think will change, be prepared for something else. And ask the questions that aren’t on the spreadsheet.
How do they train?
What do they reward?
What do they cut first when margins get tight?
What part of your culture would a buyer never see on a spreadsheet?
Originally published on LinkedIn.
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