The Corner Series

Proceed with caution — and a little creativity. 

That’s the tip-off for 2023. In this episode, Geoff Cockrell, host of The Banker's Corner, sits down with Bob Bartell, Managing Director and President of Kroll Corporate Finance and CEO of Kroll Securities, LLC. 

Together, Bob and Geoff delve into a topic that has been at the forefront of private equity for a few months now: tightening credit. Given his position at Kroll and experience in a broad array of corporate finance advisory engagements, Bob provides an apt commentary on the current climate, including the impact on healthcare business.

The two also discuss market trends and pauses they’ve seen in 2023 so far, and the creative ways lenders and private equity professionals have been able to think outside the box. 

“Until the owners of these businesses — many of them are private-equity-backed mid-market, private equity sponsors — see an opening in the credit markets, there's a pause,” says Bob, who goes on to explain why and how this pause affects different levels of the market.

Tune in to hear about the outlook for the rest of 2023 and the creative ways professionals are dealing with workarounds and earnouts in this strange market climate.

Name: Bob Bartell

What he does: Bob Bartell, CFA, is the Managing Director and President of Kroll Corporate Finance and CEO of Kroll Securities, LLC. He’s also a FINRA registered broker/dealer. He specializes in a variety of corporate finance advisory engagements, including fairness opinions, solvency opinions, M&A advisory, financial restructurings, shareholder disputes, and more. 

Organization: Kroll

Connect: LinkedIn

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This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information, or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.

In most professions, pay-for-performance is the norm. A certain level of performance is expected for an individual to get paid. So why has the fee-for-service model in healthcare persisted for so long? And what’s causing the shift towards value-based care? 

On this episode of The Professor’s Corner, Larry Elisco, Partner at Wipfli LLP, discusses trends in value-based medicine with McGuireWoods’ Geoff Cockrell. The two acknowledge that the compensation structure has had a slow start despite its promising future.

“My view is that value-based care changes the landscape. It's pay-for-performance. It creates risk at the provider level where providers are in fact either going to be paid for performing well or not being paid if they don't perform well. And that's really what I see as a mega trend,” says Larry. 

Some of the subspecialties that have been embracing value-based care are those that have commercial payers and can offer bundled payments, including orthopedics, cardiology, and OBGYN. Areas where a specialty is contained within itself are more likely to engage in value-based contracting. 

Finally, Larry also shares insights into how buyers are approaching deals while incorporating value-based care and the importance of having strong data analytics and infrastructure in place.

Name: Larry Elisco

What he does: Larry Elisco is a partner in Wipfli LLP’s healthcare practice and works closely with physician practices to provide accounting, audit, and valuation services.  He has extensive experience serving the needs of physicians and their practices. 

Organization: Wipfli LLP

Words of wisdom: “I think in every level of healthcare, that pay-for-performance component really has to be in place at some point.” 

Connect: LinkedIn

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This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information, or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.

Did you know that pharma services are one of the most active areas of healthcare investing? 

On this episode of The Capital Corner, McGuireWoods' Geoff Cockrell sits down with Daniel Brinkenhoff, Managing Director at Centre Partners, to discuss the segmenting of the pharma services sector and some of the headwinds and tailwinds that investors are seeing.

To kick things off, Dan explains how the pharma services sector has seen an uptick in outsourcing due to rapidly evolving science and technology. These advancements have opened the door for players like biotech and biologics by bringing down the cost of targeted therapeutics, but have driven up the costs of bringing new drugs to market by increasing the complexity of production. The market is further segmented by the complexity of the science itself, requiring more specialized skill sets that are difficult for one company to employ. 

Despite the new challenges with more complex science and technology, innovation is driving a strong growth outlook for the sector. Dan anticipates that the new therapeutics coming to market will continue to result in high single to low double-digit growth. 

This sector is also sheltered from the broader economy, with massive capital going into developing new drugs, whatever market conditions may be. Dan also shares insights into the niche subspecialties that he finds particularly compelling, including clinical trial site management, patient recruitment, and anything consulting-oriented. 

“The knock on some of these segments is that sometimes they’re project-based work, but there are some interesting consulting firms that really help the smaller-end biotech firms navigate the FDA approval process, their regulatory submissions, paperwork with the FDA, market mapping, and some interesting specialty firms out there that we think are quite attractive as well,” he says. 

Name: Daniel Brinkenhoff

What he does: Daniel is the Managing Director at Centre Partners. Before joining the firm in 2008, he gained experience at ClearLight Partners, LLC and UBS Investment Banking. 

Organization: Centre Partners

Connect: LinkedIn

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Subscribe to The Corner Series in your preferred podcast app so that you never miss an episode. 

This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information, or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.

On this episode of The Capital Corner, McGuireWoods' Geoff Cockrell sits down with Dan Hosler, Managing Partner and Founder at DuneGlass Capital, to discuss the trends for healthcare services companies that are interested in using the private equity playbook to surcharge their growth. 

Dan discusses how the doctor equity model works to provide alignment among all stakeholders, including patients, staff, doctors, and investors. The model starts with knowledge sharing so doctors have a strong base understanding of private equity, before moving on to strategizing on how to keep incentives aligned over time. Aligning incentives is crucial when creating a true alternative to traditional private equity investments. 

“To us, doctor equity starts with knowledge-sharing with all our partners.” Dan says. 

Dan and Geoff also review which subsectors and specialties could be interesting investment areas. Two areas Dan and his team are researching are the biotech and pharmaceutical spaces. Both are areas where there’s an opportunity to reduce costs in the healthcare system while improving patient care. They also talk through investment opportunities in value-based care, an area that has also seen an uptick in interest in recent years, and the complexity and risk-taking that can come along with those investments.

Name: Dan Hosler

What he does: As Managing Partner and Founder at DuneGlass Capital, Dan has both operational experiences, having started three companies before business school, as well as deep deal experience, having spent 15+ years in private equity. Most recently he led M&A for an eye care rollup where he closed 10 deals in under two years.

Organization: DuneGlass Capital

Connect: LinkedIn

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This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information, or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.

On this episode of The Banker's Corner, Provident Healthcare Partners’ Senior Managing Director Rebecca Leiba and Managing Director Eric Major sit down with McGuireWoods' Geoff Cockrell to discuss investing in cardiology, a sector that has seen a sizable uptick in activity over the last two years. 

“What we're seeing in the specialty is that consolidation and investment seems to be moving at a pace that's far exceeding what we've seen in other physician specialties areas,” Eric explains.

Rebecca, Eric, and Geoff discuss what makes cardiology attractive for investors, the various avenues for acquisitions, as well as ancillary opportunities for cardiology practices, such as cardiac urgent cares and rehabilitation centers, which are becoming more attractive to independent groups and investors. From potential headwinds to growth opportunities, they cover all the trends they predict to see in the cardiology sector.

“I do think we are still in the early innings of this consolidation,” Geoff says. “Even if it's not a huge market, there's going to be quite a bit more activity and interesting future maneuvers…It’ll certainly be interesting to see.”

Name: Rebecca Leiba

What she does: Rebecca is a Senior Managing Director at Provident Healthcare Partners. During her career, she has completed over 200 healthcare M&A transactions and has organized interactions between buyers, clients, attorneys, CPAs, and consultants through the entire transaction processes. 

Organization: Provident Healthcare Partners

Connect: LinkedIn

Name: Eric Major

What he does: Eric is a Managing Director at Provident Healthcare Partners. For the last decade, Eric has supported the planning and execution for deals pertaining to multisite provider-based businesses focused on surgical care and rehabilitation. 

Organization: Provident Healthcare Partners

Connect: LinkedIn

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This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information, or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.

In this era of private equity involvement with healthcare, investors can no longer avoid liability with the claim that they are just an investor. The liability of investors in companies is now in the spotlight. Professionals in the industry predict that the government will increase the frequency of commercial audits and CMS audits.

On this episode of The Professor’s Corner, host Geoff Cockrell is joined by Wiks Moffat for a discussion of the importance of compliance programs. Bringing over 25 years of professional experience to the role, Wiks is Principal at the HealthCare Compliance Network, where he assesses, builds, implements, and maintains compliance programs. 

Wiks shares insights on what to look for during due diligence, in particular, whether a company has a culture of compliance. He advises companies to consider compliance at all times, and recommends putting a compliance committee in place to ensure they company have the necessary reporting structures in place.

“You would much rather, because of your culture of compliance, find a problem, than have the feds or the commercial payers come in and start poking around and find these things because then you're in a much less defensible position. For lack of better words, you want to be policing yourself throughout all of this,” explains Wiks.

Name: Wiks Moffat

Organization: HealthCare Compliance Network

Connect: LinkedIn

• Compliance programs are not optional.
• Healthcare compliance companies and legal support complement each other.
• Compliance is a continual process.

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Subscribe to The Professor’s Corner in your preferred podcast app so that you never miss an episode. 

This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information, or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.

In January 2023, the Federal Trade Commission released a proposed rule that is making waves in the business and legal communities. The proposed rule would make it illegal for employers to enter into noncompete agreements with workers in most circumstances and would also require employers to rescind existing noncompete provisions.

The FTC is currently accepting public comments about the proposed rule and conducting listening sessions and the FTC has asked for feedback on ways in which the final rule may be narrowed or expanded.     

Holden Brooks, Partner at McGuireWoods Antitrust Group, sits down with McGuireWoods’ Geoff Cockrell to explore the potential ramifications of a noncompete ban, potential legal challenges to the rule and the scope of the FTC’s rulemaking authority, what to watch in the ongoing debate surrounding the scope of the rule, and what alternative tools to consider in order to protect your business interests in the event that the rule goes into effect. 

Name: Holden Brooks

What she does: As a Partner in McGuireWoods Antitrust Group, Holden focuses on mergers, complex litigation, civil and criminal enforcement, and counseling across several industries with a focus on Healthcare.

Organization: McGuireWoods

Words of wisdom: “[The FTC] are charged with this and they have a real responsibility to pursue this. So I think this is sort of the best part of democracy, in a way. We have an opportunity to speak up, to deliver thoughtful comments to this body, and to also have our courts consider whether this is the way that things should play out, whether this is the right way to make policy.” 

Connect: LinkedIn 

Top takeaways from this episode

• Most workers would be affected by the potential rule.  This includes sophisticated, high-earning employees with a great deal of leverage in employment negotiations as well as lower-wage workers with no leverage.  Watch for some narrowing in the final rule in this area.
• There will be substantial legal challenges.  Many groups have promised to bring legal challenges to the rule if it is adopted, which could delay the need to comply with the rule for a substantial period of time.  Watch for these to go right up to the U.S. Supreme Court.
• What constitutes a noncompete?  One area to watch as the rule is finalized is what the FTC will consider to be a noncompete covered by the rule.  Will it only be traditional restrictive covenants that are affected, or “de facto” noncompetes as well?

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Subscribe to The Professor’s Corner in your preferred podcast app so that you never miss an episode. 

This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information, or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.

In this episode of The Professor’s Corner, Mark Freedlander is back to continue the discussion on the ways a sponsor company can find themselves liable if their portfolio companies enter financial distress. 

Having debt recharacterized as equity is the next level of exposure that sponsors need to understand. 

Simply calling something debt doesn’t cut it. Being unclear in the management of debt versus equity can open sponsors up to companion fraudulent conveyance claims if the courts recharacterize a company’s debt. 

The last piece of the liability puzzle focuses on breach of duty claims. If a sponsor is sitting on the board of one of their portfolio companies, they need to stay informed of the company, its financials, and potential liquidity issues. This awareness can be the difference between creating or avoiding liability issues. 

“When a portfolio company runs into trouble [...] it may very well make sense for an independent director to be brought into a company,” explains Mark. “Having an independent director that is truly independent can provide a significant level of protection to the financial sponsor or the equity sponsor.” 

For sponsors concerned about potential liability exposures, Mark offers insight into different situations that a sponsor may encounter, discussing the protection that is available to a sponsor who recognizes problems early and takes a cautious approach. 

This is the second episode in a two-part series. If you haven’t listened to the first half yet, check out the previous episode for an overview of statutes and claims that sponsors need to keep on their radar.  

Name: Mark E. Freedlander

What he does: As a Partner at McGuireWoods, Mark has been advising clients about creative, business-oriented solutions to matters involving financial distress for the past 25 years. Mark is a goal-driven problem solver whose clients benefit from the creative, pragmatic, and strategic perspective he brings to each engagement.

Organization: McGuireWoods

Words of wisdom: “The more attention to detail you do pay, the better that your records are, the greater the level of deliberation about things that are close calls — the better off a sponsor will be.” 

Connect: LinkedIn

Top takeaways from this episode

• Calling something debt doesn’t mean it’s debt in the eyes of the law. According to Mark, recharacterization of debt will occur under common law, and the courts may consider debt instruments to be equity, which can add additional exposure to the sponsor. 
• Sponsors can be liable when you can’t differentiate the sponsor and the portfolio company. Liability is often created when the sponsor has significant control over its troubled portfolio company. The most common instances arise under ERISA for anything from COBRA claims, warrant claims, or pension plans. 
• Sponsors who sit on the board of portfolio companies need to be informed. Board members have a duty of care and a duty of liability that needs to be fulfilled. Awareness of what’s happening with the company, its financials, and any potential liquidity issues can be the difference between creating or avoiding a liability situation.

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Subscribe to The Professor’s Corner in your preferred podcast app so that you never miss an episode. 

This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information, or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.

Many investors take on an operating thesis that, by law, the obligations of investment companies are not the obligations of the investor. They apply this whether their fund has invested in the securities of a limited partnership, a limited liability company, or a corporation. 

In this episode of The Professor’s Corner, McGuireWoods’ Mark Freedlander joins host Geoff Cockrell to explore the limits of this idea. 

As chair of the bankruptcy group, Mark has seen a host of real-world examples where sponsors of private equity funds get themselves in trouble when their portfolio companies are experiencing financial challenges. 

“If you're a sponsor that owns a distressed company, you need to be careful with money and things leaving that company — both in terms of the timing of when that's happening, the nature in which it's happening, and the value,” Geoff explains. “Recognize that all of those transfers will be looked at after the fact with different eyes.”

It’s within normal course of business for sponsors to be overseeing aspects of the day-to-day management of their portfolio companies. However, if you’re a sponsor that owns a distressed company, you need to be careful about monetary decisions and money leaving that company. 

On this first of two episodes on this topic, both Mark and Geoff review examples of potential issues drawn from real-life situations they have lived through and experienced, along with their experience on the litigation side of these issues. The next episode will continue the discussion where they left off, looking deeper into the nature of these claims and reviewing proper board management. 

Name: Mark E. Freedlander

What he does: As a Partner at McGuireWoods, Mark has been advising clients about creative, business-oriented solutions to matters involving financial distress for the past 25 years. Mark is a goal-driven problem solver whose clients benefit from the creative, pragmatic, and strategic perspective he brings to each engagement.

Organization: McGuireWoods

Connect: LinkedIn

Top takeaways from this episode

• Patterns emerge in troubled portfolios. According to Mark, it’s common for sponsors to see potential claims asserted against them.
• It’s important to understand preference statutes when it comes to payments. A preference statute exists to ensure creditors are treated fairly. Often this will come into play when reviewing payments and antecedent debt with a transferee.
• Fraudulent conveyance is designed to protect creditors from fraud. Compared to preference statutes, fraudulent conveyance exposure doesn’t have the same defenses as a preference action.

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Subscribe to The Professor’s Corner in your preferred podcast app so that you never miss an episode. 

This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information, or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.

It’s nine to 12 — maybe even 18 — months after the deal closed. There’s an R&W policy in place; the purchase agreement covers an array of representations and warranties. But you become aware of something that might be a breach. 

Tony Tatum, a partner at McGuireWoods and head of the Insurance Recovery Practice, certainly knows the ins and outs of claims, and how to properly see them through to fulfillment. 

In this episode of The Professor’s Corner, Tony walks listeners through the process of filing a claim, citing the internal and external issues that might arise, as well as errors to look out for from the beginning. He discusses the importance of gathering evidence, being thorough, advocating for your company, and mitigating losses.

“In some ways, you don't want to go overboard, but you certainly want to start gathering [evidence] — two or three key buckets of emails or other communications. Of course, right off the bat are things that are critical to whatever that issue is,” says Tony. “And be looking at the knowledge provision and the insurance policy.”

Name: Tony Tatum

What he does: As a Partner at McGuireWoods, Tony is co-lead of the Insurance Recovery Practice. With more than 23 years of litigation practice, Tony represents both prominent public and private companies on insurance coverage and complex commercial disputes.

Organization: McGuireWoods

Words of wisdom: “You want someone who's got that expertise to be thinking about the issues and making sure that you're crossing the Ts and dotting the Is as needed.”

Connect: LinkedIn

Top takeaways from this episode

• There are two sides to every claim: internal and external. When a claim is filed, Tony breaks it down into two buckets. Doing so helps prevent missteps while also preparing for every possible outcome. 
• Be thorough with information gathering. From the moment of a potential breach, information and evidence gathering should begin. This is crucial to proving a breach and reaping the benefits of the filed claim. 
• Advocate for answers. When it seems like the insurer might be dragging their feet with little intention to pay the claim, do not hesitate to advocate for your company. Call, ask questions, and be a little reminder that the claim is still there and you have proof to back it up.

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Subscribe to The Professor’s Corner in your preferred podcast app so that you never miss an episode. 

This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information, or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.