Entrepreneur’s Go-Between Finds the Perfect Match

It seemed like an entrepreneur’s dream: Patsy Jones was being wooed by not one, but several big competitors interested in buying her company, Birthcare Inc.

Jones, a registered nurse experienced in caring for pregnant women with medical problems, provided nursing and high-tech monitoring services for patients in their homes.

But instead of feeling flattered, Jones felt confused and stressed as she tried to negotiate a deal on her own. She didn’t want to give up, because she needed a strong financial partner to meet her personal goals for growing the tiny company she opened in 1988.

“I felt my days were numbered unless I brought in help and money,” Jones said. “I knew the only way I could do that was to get venture capitalists to come in or sell to a bigger company.”

Because she was the major asset of a highly personalized service business, maintaining good relationships with physician clients was critical. Without physician referrals, Birthcare would not have any business. Jones, who was familiar with monitoring high-risk pregnancies in a hospital setting, realized that she could help women who were confined to bed at home. If a woman was experiencing premature labor or other pregnancy-related problems, Jones’ staff of specially-trained nurses would be dispatched to teach them how to monitor their uterine contractions with monitors set up in their homes.

For about two hours a day, morning and evening, patients would wear belts designed to monitor contractions. Then, the monitor sent the results via the telephone line to Jones’ office for review.

“Whatever company I went with had to be a good fit for me and the physicians too,” Jones said.

Although she met with corporate suitors in Chicago and Atlanta, none of the deals proposed to her felt right. At one point, a friend introduced her to John Taylor, a principal in Parsons, Taylor & Co., a Brentwood firm specializing in small- and middle-market mergers and acquisitions.

Taylor reviewed Birthcare’s financial statements and helped Jones establish a value for the company. He also helped her clarify her personal goals, both in terms of cash from the sale and her continued employment after the sale. Taylor then suggested that she consider Curaflex Health Services Inc., a fast-growing, publicly traded company offering a variety of home health care services, including infusion therapy for cancer and AIDs patients.

“We had one meeting with the chief financial officer and the vice president of operations,” Jones recalled. “I basically made up my mind at lunch.” It then took another meeting or two with the firm’s top executives before the deal closed two weeks later.

Jones said she immediately knew she’d found the right match and “had the feeling that I could get things done fast.”

In July, Taylor closed the deal with the Ontario-based company, bringing Jones twice as much money as she had been previously offered. Jones’ company is now part of Curaflex’s Birthcare Services unit. “Nothing has changed, Curaflex bought my concept as well as my business and, for me, it’s been the perfect union.”

Norman Werthwein, senior vice president of Curaflex, said that shortly after Curaflex went public in March, 1992, they began searching for acquisitions.

“We came across Patsy’s company in the summer and it was exactly what we were looking for,” Werthwein said. “It was a good way to enter the market.”

Werthwein said Curaflex is “very pleased” with the acquisition. He said the company plans to expand the Birthcare division beyond Southern California and begin offering similar services to patients served by the company’s 29 locations across the U.S.

Taylor said too many entrepreneurs trying to sell their companies waste time and energy dealing with mid-level executives who have no authority to close a deal.

“Y ou need to get to the deci sion maker--the president or chief executive because there are no mergers or acquisitions made without the president giving his or her OK,” Taylor said.

Taylor said if the company really wants to buy your firm and you insist on dealing at the highest levels, you will get your way. “The people at the top are much more sensitive to time,” Taylor said. “Middle managers are too busy ‘meeting you’ to death.”

You should also come up with several different ways to sell your company, beyond accepting a cash payment. Taylor said it might be better to be paid a royalty on the products sold, continue working for the company under an employment contract, accept an interest-bearing note for part of your payment or stay on as a consultant.

“There are 100 different ways of putting a lot more money in your pocket if you are truly partnering with the firm you are merging into,” Taylor said.

Meanwhile, Jones said she has no regrets about her decision to sell Birthcare.

“It’s been almost a dream come true for me--growing my company with the help of a big corporation.”