Summary of Work:
Facing financial and operational challenges, the Frisbie Memorial Hospital Board of Trustees signed a non-binding LOI to sell the operations and assets of their community based acute care hospital to HCA Healthcare, a national investor-owned healthcare company. At the time, the Board of Trustees did not have a transaction advisor. After securing the LOI, the Board of Trustees faced significant challenges in advancing deal negotiations. Given the Warbird professional’s experience in successfully representing prior clients like Frisbie Memorial, HCA recommended to the Frisbie Board of Trustees that the Board consider retaining the Warbird professionals to manage the transaction process and represent the Board as its transaction advisor.
In addition to serving as transaction advisor, Warbird also provided the Board of Trustees with a full-time interim Chief Financial Officer to lead Frisbie’s finance department. The Warbird OnDemand CFO provided leadership and direction to the hospital’s finance team and strategic financial analysis to the Board of Trustees, CEO, and Warbird M&A team in support of the transaction negotiations.
Areas of Focus:
Transaction Advisory Services. The Warbird team lead in negotiating definitive terms and reaching agreement with the buyer group. As part of these services, the Warbird professionals negotiated key representation and warranty provisions, brought the parties to agreement in normalizing working capital, negotiated transition services to be provided by the buyer group, coordinated and negotiated the early extinguishment of outstanding bank debt, negotiated the buyout of terminated equipment leases and facilitated the acquisition of insurance tail coverage for the seller group. The Warbird team also provided information and support for the State Attorney General review process. Importantly, the Warbird professionals served a key role as central coordinator between the Board of Trustees, the hospital leadership team, and transaction counsel. This coordination role was key to securing a successful conclusion to the transaction.
Interim Financial Management Leadership. Leadership turnover prior to the transaction left the hospital void of several finance team members, including its CFO. The Warbird team provided a full-time onsite Chief Financial Officer to lead the finance team, provide transaction support, ensure timely and accurate financial reporting to the board, manage monthly cash flow requirements, and oversee implementation of operational improvements to the hospital’s business office and cash collection procedures.
Post-Transaction Services. The Warbird M&A team was also retained to provide Post Transaction / Wind Down Services for the Board of Trustees. The Warbird wind down team also included a full time CFO resource. Collectively they oversee the wind down of discontinued employee benefit plans, obtained necessary insurance policies for the newly formed community foundation board, reviewed and negotiated post-closing working capital calculation adjustments with the buyer group, facilitated the settlement of excluded third party payor agreements and government payor cost report settlements, negotiated the disposition and liquidation of curtained excluded assets and ensured timely submission of required state and local regulatory filings.
Conclusion:
Due in part to the efforts of Warbird’s transaction advisory team and the Warbird OnDemand Chief Financial Officer, the Frisbie Memorial Hospital Board of Trustees reached a timely and successful transaction closing. With its proceeds from the transaction, the Board of Trustees established a new community health foundation with $20 million in assets. The foundation will use those proceeds to promote healthcare initiatives in the broader community.