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Want to Sell Your Drug Addiction Treatment Center? What Are Investors Looking For?

Here are some of the things to think about when preparing your business for sale, and some of the questions you might want to think about and be prepared to answer.

Why are you selling? Make sure you have a clear, consistent and coherent answer. Are you just looking to unload and make a fast buck or is this something that is well thought out, perhaps part of your original exit plan? I can’t tell you what every investor is looking for, but in my experience, being authentic and telling them the real reason you want to sell should serve you best. Maybe you just need some additional funding to acquire the next location or add several employees. Investors look to make deals and might be interested in partnering with you to help make this happen.

What are you selling? Many treatment centers also have real estate assets, which can be a positive or a negative. Don’t rule out the possibility of selling the business but keeping the real estate and leasing it back to the new owners. In the long run, you may be better off holding the asset, seeing a guaranteed income stream, and selling the real estate down the road, in a stronger market. Furthermore, investors may be willing to pay more for your business, if that’s what they are really interested in, then if they have to put their capital into real estate that they prefer not to own. Negotiations tend to go best when you can create a win, win scenario.

Are your financials in order? The better you are managing your cash flow the faster the process will go and there will be fewer surprises in the final negotiations. In the addiction treatment center business it is difficult to manage incoming and outgoing cash especially when dealing with Insurance companies and clients who are scrambling for cash from multiple different sources at the last minute. Run a tight ship and you will be rewarded.

What is your adjusted EBITDA? EBITDA = Earnings Before Interest Taxes Depreciation and Amortization, an indicator of a company’s profitability that is used by investors to determine what your business is worth. Do you run your car or other personal expenses through the business? Do not fret. These actually qualify as “add backs” when calculating an “adjusted” EBITDA number. The new owner will not have these expenses so they can add them back to stated profits to determine the value of your business. The same applies to any owner compensation in excess of market rate for work performed, which automatically qualifies as an add-back. Careful: if an owner is not compensated on the books for work performed, this needs to be considered as well (in this case, a subtraction). In general, be prepared to make the case that your adjusted EBITDA, the amount of EBITDA a new owner would actually see, is higher then your actual EBITDA.

Do you know what your business is worth? Be realistic about its value. The days of getting 8X EBITDA are few and far between. In the current market, 5X is more likely, unless there is a compelling growth story. And we all know what has happened to the real estate market. As with any business, investors are looking for a return on their investment. The days of loose credit are over, so investors, who are putting up a higher percentage of equity, can’t afford to overpay and still see a return on their investment.

How is your clientele “trending?” Are average rates trending upwards or are you having to discount your services in order to get the clients to close? What is the average stay in your treatment center? Is it increasing or decreasing? Are you typically a 30-day program but people want to stay the extra month? Be prepared to highlight positive trends, and explain any changes that have occurred that might be of concern. Buyers are wary of centers with decreasing occupancies, reduced stay periods, or other signs of softness. Particularly when owner motivations are not clear, deteriorating business trends create the impression that the owner is looking to get out because his business is going downhill. If trends are poor, consider waiting to sell until you have some positive trends to point to.

How will the business be managed on a day-to-day basis under new ownership? Having a behavioral health or drug treatment center run itself without the owner is definitely attractive. So if you aren’t used to delegating, it might be time to start thinking about it. Acquisition deals come in many different formats and it is not uncommon for the owner(s) to stick around after the sale for a few months or even a couple of years. Depending upon your objectives, this could be a positive (extra income) or a negative (if you’re ready to move on). Willingness to help out with a transition is always viewed as a positive by buyers, but so is having a business that doesn’t depend 100% on you personally.

Should you work with a business broker or investment banker? If you are in a hurry to get a deal done, this could make sense, but it pays to use your network, ask around, and talk to buyers who may approach you directly before listing your business “for sale”. You may be able to negotiate a finder’s fee rather then an outright commission, which could be significant savings, or avoid a fee altogether if you are approached by a buyer directly. Furthermore, a discreet sale may be preferable to a public process, which can be disruptive and concerning to employees and patients. Another disadvantage of formally listing your business for sale is that if it doesn’t sell quickly, at some point the listing becomes stale and buyers tend to assume there must be something wrong with the business.

What are buyers looking for right now? Criteria may include location, size, profitability, and type of program offered. I know a significant buyer with a strong interest in outpatient treatment, methadone clinics for example. In the residential area, larger facilities open up a different class of professional buyer/investor compared to smaller ones, which are more likely to be purchased by an individual or small group of investors.

Last but not least, before you sink a lot of time into this process, make sure you qualify any prospective buyer who approaches you. Evaluating a fit is a two-way street. Make sure the buyer is qualified financially to make the purchase. I have seen deals fall apart when the pursuing party does not actually have the funding in place, and needs to raise capital or find investors in order to complete the purchase. Are you looking for cash or willing to take a note? Don’t rule out a seller note, if you can afford to take it. In some cases it could be beneficial to all parties.

In summary, there are quite a few things to think about when selling your treatment center. Fortunately, if you are dealing with a qualified buyer, a sincere attempt to work through these questions will be met with patience and appreciation. Call me if you would like to have a confidential conversation.

Jim Peake is a management and internet marketing consultant with special focus on the behavioral health and the addiction treatment industry. He helps treatment centers improve their web presence and in lead generation online as well as offline. He uses advanced SEO and PPC direct response advertising for addiction treatment search engine marketing. He also helps sellers meet buyers of treatment centers.

SEO Strategy for Addiction Treatment Centers, Counselors and Therapists

In these tough economic times, learning new skills and taking a step back to take a “personal” or “corporative” inventory will often reveal areas for major improvements and some glaring gaps in business practices. When it comes to marketing and business development, there is no better source than the Internet, especially for the counseling, therapy and treatment industries. With the Internet as the marketplace for new business through hundreds of millions of searches, a good website is not only needed, but it needs to be well optimized so it can be found when potential clients search for the services you offer. A website without optimization, no matter how good it looks, is no more useful than an expensive, glorified business card with no one to see it.

If you don’t have a web site it is strongly recommended that you invest in one, specifically built by someone who has experience building websites in your industry. A web designer and optimizer with knowledge of your specific industry can save you critical time and money. The authors of this article are two such people, and we’ll endeavor to share our knowledge and experience in this area so as to prevent costly and time consuming mistakes…

As a counselor, therapist or treatment center you are selling “people, expertise, relationships and experience.” People’s first introduction into who and what you are as a professional or treatment provider is through your website. It is human nature that individuals do business with people they know, like, and trust. In keeping with this reality, we want to allow the web site to convey the messages of personality, philosophy, experience, skills and specialties so that visitors can actually “get to know” you and your how you approach your profession when they browse through your website.

What we will cover in the article is how to prepare your web site and your business to take advantage of the massive search traffic for behavioral healthcare services on the Internet.

So how do therapists, counselors and treatment centers actually get clients? Some rely on the yellow pages to generate business and sometimes they come from other professionals. The fact is that in today’s world the Internet plays the biggest role of all in getting business into the healthcare field, period. So unless you have more business than you can handle (how many of us are in that situation?), it is imperative that you engage in Internet marketing. In today’s world, success in the behavioral healthcare field is intimately related to one’s ability to successfully market themselves on the Internet. If an individual searches the Internet for therapy or treatment, you need to be positioned in such a way that you get their business. Where else (besides the Internet) can you share ALL of your papers, articles, pictures and testimonials with the rest of the world for virtually the price of a cheap cup of coffee each day? The key is to share it in a way that it will be found when individuals in need of help search for the terms that are most relevant to the specific services you provide. Your practice or treatment center can literally be a walking, talking billboard of your expertise and services on the “Information Super Highway.”

The Internet does a great job at helping people with specific problems find the best people with the right solutions to meet their needs. For the purposes of this article, the preferred method of client acquisition (from the Internet) is to have your Internet leads come through your own web site first and not through a third party [web site]. (This doesn’t mean you shouldn’t use directories or Internet Yellow Pages – in fact in many cases the exact opposite is true, but we’ll discuss that later in this article). Also, in many cases, referrals from the Internet will only come in through your web site AFTER they have qualified you based on the information they find on the Internet about you. For this reason it’s imperative that your website be in-depth and informative about who you are and what you have to offer, and it’s equally imperative that you have links from other relevant sites on the internet linking to your site…

Why links you ask? Well, would you trust a medical reference that didn’t cite its sources? In the same way, Search Engines don’t trust websites without supporting, relevant links. Links should be thought of as “votes” given by one website to another on the Internet… the more of them you have, the more intrinsic value your site has compared with all other sites on the internet in the eyes of Search Engines (Google in particular – this is the basis of the Google PageRank Algorithm as developed by Larry Page and Sergey Brin during their studies at Stanford from 1995-97, and developed into a general rating system for websites on a scale from 0-10, known as the PageRank scale)… And the greater the relevance of the site that’s linking to you (in relation to the content of your own site), the more value you’ll get from each individual incoming link – in other words a “vote” from another treatment professional or treatment center is naturally more relevant and therefore more valuable than a vote from a car dealership…

Web site optimization (also known as Search Engine Optimization or SEO) can be divided into two main areas. First, you have “on site” optimization, meaning the content and HTML tags are accurate, in keeping with established standards, and maximized for relevance. Second is what’s called “off site” optimization, which entails link building and linking strategies (internal and external) to enable your well written, well optimized content to rank.

Onsite Optimization for Therapists, Counselors, and Treatment Centers

To achieve success in Internet marketing, you should take just as much pride in your website as in your profession, not only in the design and copy of the site, but also in your website optimization (SEO). (Which in turn results in attracting the right clientele)
Often times, but not always, people who are in need of therapy or treatment do a Google search on the services followed by the location, i.e. “drug treatment centers in Florida”. What typically come up are “local listings”, and often directory listings. Directories are great, and in a perfect world I tell all my clients to get listed with as many directories as possible (track the ones that help you rank and drop the ones that don’t). The way I value directories is how many links they give me, period. I don’t value them based on the number of clicks they can or can’t send to my website… The clicks are for the most part superfluous – they’re not the real value of advertising on important industry directory sites. The real value is in the relevance these directories transmit to your website for terms for which you want to rank better. The more relevant links I have the better chance I have of being found in searches for the services I provide. More on that in a minute…

Where SEO enters the picture is if I’m a heroin addiction counselor in Marblehead, and I have my therapist web site properly “optimized with tags” (which I will get into in a second) and full of high quality heroin addiction content unique to my website, I stand a possible chance of ranking somewhere in the first 10 pages on Google’s search results for “heroin addiction counselor”, but even so, just being in the first 10 pages on Google isn’t good enough. Very few people look past the first page of search results, and virtually no one continues searching to the 10th page or beyond. To have success with Internet searches for key terms specific to your profession and services, you need to be on the first page, preferably above the fold (above the fold is everything visible on a computer screen without having to scroll down), so for most popular screen resolutions that means within the top 3-5 results.
So how do I ensure that my heroin addiction counselor in Marblehead web page gets to a top spot on Google’s search results? [See Part II about Off-Site Optimization]

Let’s assume you are the best heroin addiction counselor in Marblehead. We will assume you have at least 700 -1,000 words of content (fewer is not favorable for Google) talking about your experience providing heroin addiction treatment and heroin addiction counseling, your education, level of skill, and your approach to treating clients. The content is in place, but Google needs to know that this content is there on YOUR domain. The easiest way for Google to find and index your website is for you to “TELL” THEM IT’S THERE! How is this accomplished? You “tell” them by tagging the HTML code you used to build your web page accurately and informatively – you put your main key phrases in the page’s main XYZ tag, use XYZ tags to give alternative textual representations of all images on your site, XYZ tags for links, meta tags etc. etc. Or ask your web person to generate the proper Title Tags, Keyword Tags, Description Tags, Alt Tags, Image Tags, etc.

The big blue link you read on the Google search result is your TITLE TAG (as referenced above, the HTML syntax for which is your title tag). The black text is often the description tag (or an excerpt thereof), or if a meta description is not present Google will grab content off your web page and use it as the search result description, which might not be what you would want as a description. (Google may pull text that isn’t very useful as a search result description). (Also, you don’t have a lot of room here to write a description so it should be concise and to the point – a good rule of thumb is to limit your meta description to 25 words or less). So if your site is JohnSmithCounseling.com and you’re really good at treatment for heroin addiction, the title tag might read something like Heroin Addiction Counselor | John Smith Counseling Marblehead (Title tags should be limited to 65 characters according to several SEO experts, but there is flexibility). Why would you write your title tag this way, instead of simply John Smith’s Counseling Services? Because unless people know of you by name in advance, they won’t be searching for “John Smith Counseling” – they are exponentially more likely to search for Heroin Addiction… or Counselor… or Counseling in Marblehead etc… With title tags, you always want to put your most important keyterms first.

For the meta description tag you have more space to work with, so you naturally want to offer more information than the title tag allows – but just as with the title tag, it should be relevant and keyword rich, and contain the same keyterms you used in the title tag. So continuing the example, the description might read, “John Smith Counseling of Marblehead is the leading authority on heroin addiction in the state of Massachusetts for the past 25 years.” You want to draw the Google searcher to click the link to your site… As long as the information on the landing page (the page that they go to when they click the link in the search results) is well written and informative, and answers the searcher’s questions. The combination of your content and good optimization (and links, we’ll go into that next) will make you rank well enough for your site to be found by searchers, and assuming they’re looking for counseling you stand a great chance of getting that client!

So now we have the easy part completed… Many SEO specialists, web developers, and consultants can provide this SEO service for you – it’s basic optimization 101. I personally prefer to teach clients and have them provide the direction to their development team. Once it’s learned, onsite SEO is fairly easy to execute (doing it well and ranking #1 for competitive terms however requires much more skill and experience).

Part II Offsite Optimization for Therapists, Counselors and Treatment Centers

In order to build your business online you need to get links, lots of links, as many relevant links from high value sites as possible. It is always a good idea to try to request links from hospitals, universities, doctors’ web sites, directories etc., and embed links to your website when commenting on other people’s blogs. These links are how people (and Google) find websites, and are a big factor in how Google ranks them as well. In fact, on today’s Internet, they’re the biggest factor, PERIOD.

Links are also the most efficacious advertising product available in the therapy and treatment industry to make your website rank – PERIOD. If you were a marriage counselor, I would search for a few marriage counseling web sites, directories and blogs to advertise on. Getting multiple relevant marriage counseling links to your marriage counseling site is of paramount importance for generating rankings and traffic, because they’re instantly recognized as high value links going to your web site by Google and Yahoo. If you’re a drug treatment center, search for Authority directory sites in the drug treatment industry on which to advertise, like Treatment-Centers.net and receive hundreds and even thousands of inbound (super-relevant) links showing up in the Google index in a very short period of time over 2-3 months.

One brief comment on Authority sites – you’re probably asking yourself what does this term “Authority site” really mean? Authority sites are category leaders, they’re sites in any given industry on the internet that are attributed greater value by search engines than all of the other sites in that field – they’re also the most relevant and have the most valuable links available on the entire internet for your specific business… Think about it, if your goal is to rank #1 for “drug interventionist in Massachusetts” the most relevant link on the entire Internet (and therefore the most effectual single link available anywhere in helping you rank) will be from the site that ranks #1 organically for “drug intervention.” How do you find Authority sites? Look for sites that you keep finding at the #1 spot, top 5 and top 10 results across a broad sampling of the biggest, broadest, and most generally relevant terms in your industry.

In order to get the links needed to rank for competitive terms, it takes time to research and find the best directories and professional websites from which to get links, legitimately (through link requests, exchanges and advertising contracts). You can also buy links from link brokers or you can pay people to write blog posts on other blogs and link back to you for the purpose of increasing your link value and PageRank (both of which are technically questionable by Google – Google strongly discourages the buying and selling of links for the purpose of increasing search rankings). When building links and considering a certain site for link acquisition, be thorough and ask questions, and always check the other site and see how many links they have coming in. Most importantly, in the case of directory sites, ask them how many links you’ll get by listing or advertising with them, and make sure you’re getting LIVE links from them. Some sites provide links through internal redirects, negating any value you would otherwise get from the link! (Examples of large resource/directory sites that use internal redirects for links are Soberrecovery.com and Sober.com – Examples of ones that provide LIVE LINKS include SAMHSA, NIDA, Treatment-Centers.net, AboutDrugRehab.com, Drug-Rehabs.com and Intervention-Referral.com) Links with internal redirects look the same as any other links, so always have someone who knows HTML look at the code of the links before you get them.

How many incoming links are necessary to rank well? There is no simple answer to this – you might rank in the top 10 for very targeted 4 and 5 word terms (and of course your own name or the name of your organization) with fewer than 100 incoming links… Ranking for more competitive, more general terms might require anywhere from 1000 to 100,000 incoming links. We also recommend having at least 50-100 web pages packed with well-written, unique, keyword rich content relevant to your practice or treatment program – the more pages of well optimized content the better. Search Engines (especially Google) love content. Give Google what Google wants, i.e. relevant links and rich content about your business and the terms for which people are searching.

Developing and optimizing a successful website for your business in the behavioral healthcare field is an ongoing process, and top-notch rankings aren’t garnered overnight. That said, if the advice in this article is followed closely and implemented diligently and consistently, results will ensue very rapidly, rankings will rise, and your website will begin to produce a steady flow of visitor traffic and phone calls into your business.

Authored By:

Bernie Grohsman is an 8 year Internet marketing veteran, and is considered by many the premier Search Engine Optimizer and Internet marketing expert in the Behavioral Healthcare field. His accomplishments include the design and/or optimization of some of the best-ranking and best-known sites in the behavioral health and addiction treatment field, he is the former Director of Internet Marketing for CRC Health Corporation, and is the Founder and owner of Treatment-Centers.net.

Jim Peake is a 15 year Internet marketing veteran with SpeechRep Consulting focused on treatment center marketing and Internet consulting. Jim is also a certified SEO consultant at Submit Express the 10 year old Search Engine Optimization company in Burbank, CA, and is a Technical Marketing consultant for Treatment-Centers.net and planning a trip with America in Rehab.