M&A Activity Heating Up in Healthcare Industry: One Way to Keep Unexpected Costs to a Minimum

Many experts anticipate that the number of mergers and acquisitions in the healthcare industry will rise in the next few years. While there are typically many hurdles and unexpected costs associated with an M&A transaction, there are a few hurdles and costs that, when properly prepared for, can be eliminated. This specifically rings true when considering technology agreements.

In a typical M&A deal between hospitals or physician practices, numerous technology agreements, for example software license agreements, are assigned to the acquiring or resulting entity. As can be expected, technology vendors see assignments as another way to generate revenue through charging a transfer fee or a new license fee. These potential fees can be avoided if the assignment clauses in such agreements are drafted to allow for free transferability in an M&A transaction.

So, even if an M&A transaction is not on the horizon for your organization, it is wise to anticipate the hurdles and prepare as if it is. Simple contract review and precise drafting can eliminate many of the unexpected hurdles and costs inherent with these types of transactions.