Robert Hauptman, CFA, ASA, is a director at
Stout Risius Ross. He provides valuation and
financial advisory services to for-profit and nonprofit healthcare businesses for acquisitions and
divestitures, fairness and solvency opinions,
purchase price allocations, joint venture formations,
regulatory compliance, and other corporate,
tax, and litigation-related matters. Hauptman’s
experience includes working with hospitals and
health systems, physicians and ancillary service
providers, assisted living and skilled nursing
facilities, medical device manufacturers, and
other healthcare enterprises. Hauptman holds a
bachelor’s degree in finance from Miami University.
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a specific transaction, these analyses
are usually limited to situations in
which the board has narrowed a sales
process to a primary buyer. Whether
the board determines that it wants
to commission a valuation, fairness
opinion, or both, it is crucial that the
financial advisor hired is independent
with regards to the transaction.
While it is common for a board’s
investment banker to provide a fairness
opinion on a deal that it helped to
negotiate, the firm’s independence may
come into question if it earns a success
fee upon closing. Hiring an independent
financial advisor in addition to an
investment banker may provide an extra
level of transparency and protection.
The pressures of healthcare reform are
expected to continue to encourage
consolidation among community
hospitals going forward. A decision to
sell a hospital is usually controversial
and heavily scrutinized by regulators
and stakeholders. Along with hiring an
experienced healthcare deal attorney
and investment banker, engaging
a financial advisor to perform an
independent valuation or fairness
opinion can aid a board in defending
its decision and demonstrating that
it has met its fiduciary duties. J
1 CMS Fact Sheets, “Hospital Value-Based
Purchasing Program.” Baltimore: 2013,
2 CMS, “Readmissions Reduction Program.”
Baltimore: 2016, cms.gov/medicare/medicare-fee-for-service-payment/acuteinpatientpps/
3 Davidson, Paul S. and Rica Murdock, Tara. “Legal
Duties and Avoiding Liability: A Nonprofit Board
Member Primer,” Trustee Magazine 10 Jun. 2013,
4 Zall, Richard J. and Kinsella, Brian J.
“Going Private: Navigating State Review
of Nonprofit Hospital Conversions,”
AHLA Connections Aug. 2013.
5 Revenue Ruling 59-60, 1959-1 C.B. 237;
Treasury Regs. § 20.2031-1(b) and § 25.2512-1.
6 11 U.S.C. § 548(a)( 1)(B).