What Buyers Want to See in Behavioral Health Leadership Teams
By Kevin Taggart, CM&AP, Managing Partner, Mertz Taggart
At a Glance Buyers evaluating a behavioral health leadership team want evidence that the business can operate through an ownership transition. They examine who makes decisions, who is accountable for finance and compliance, and whether key people intend to remain. The structure should fit the business’s size and care model, with responsibilities demonstrated in day-to-day work. |
A buyer evaluating your behavioral health business will want to understand how much of the operation depends on you, and the answer shapes how they assess the transition they are taking on. That question is worth working through before a sale process starts, particularly if you plan to step back afterward.
There is no single organizational chart that solves this for every practice. The useful starting point is the work itself: who is doing it, who has authority to make decisions, and where the operation still needs more support.
Look at the decisions that reach your desk
One way to assess founder dependence is to look at your own day. Which decisions genuinely need your involvement? Which ones come to you because responsibility has never been assigned elsewhere, or because the team is used to checking with you first? That review can reveal where management capacity needs to develop.
Buyers will ask about those same responsibilities. They want to understand how the business handles operating questions, how performance is reviewed, and who follows through when something needs attention. A capable second-in-command can make a meaningful difference, especially when that person already leads substantial parts of the operation.
Give people the authority and support to carry their responsibilities, then allow time to see how the arrangement works. If you plan to reduce your involvement, the business benefits from making that change deliberately. You also gain experience you can draw on when a buyer asks how the company would operate after you step back.
Use the organizational chart to explain those working relationships, including where responsibilities overlap or still depend on you.
Match leadership investment to the business
It can be difficult for a smaller behavioral health business to support a full executive team. Buyers understand that. Before adding a senior role, look at the responsibility that needs to be covered and whether the business can sustain the cost.
Financial management is a good example. You need reliable reporting and someone who can explain the numbers. A controller may provide that capability at the company's current size. As the business becomes larger or more complex, its needs may justify a CFO. That decision should reflect the complexity of the work and what the business can afford.
As the organization grows, business development or corporate development roles may help it expand into new locations or pursue acquisitions. Consider whether someone needs to take responsibility for that work, how the role would change your own involvement, and whether the business can support the investment.
Clinical and operating leadership need to fit the care model as well. A structure that works for one behavioral health provider may leave gaps in another. Work through the functions your business depends on, identify who is accountable, and assess where that person needs help. This produces a more useful plan than trying to copy the management team of a much larger company.
Give compliance the attention it requires
Compliance needs a clear place in the management structure. Before adding another executive title, establish who oversees clinical documentation and billing, who receives concerns, and who has authority to act.
That person also needs access to the appropriate expertise, and you should be prepared to explain how management follows through when an issue is identified, with records that support the account.
Address retention and the owner's future role
A leadership team is most valuable to a buyer when the people the business relies on are available to continue doing the work, and turnover gets attention accordingly. If retention has been difficult, understand the reasons and be prepared to explain how management has responded.
Compensation, workload, and employee satisfaction may all be relevant. So are the effects on hiring costs and the practice's ability to maintain its operation. A buyer will learn more from an accurate account of those issues than from a general statement that the company has a strong culture.
The intentions of key leaders also matter, but discussing a potential sale with employees requires care. Work with your advisor on whom to involve and when. Confidentiality and the buyer's need to understand leadership continuity have to be managed together throughout the process.
Be equally clear about your own plans. If you want to leave after a transition period and a buyer expects you to lead the business for several years, that needs to come out before you select its offer. Your future role is part of the transaction you are negotiating.
Key Takeaways
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Building management depth takes time because people need the chance to lead before anyone can evaluate the result. If a sale is on your horizon, look at the responsibilities you would want the team to carry without you and begin there. I’d be glad to talk through it, confidentially.
→ Related: Selling the Practice You Built
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