Client: The largest otolaryngology practice in the United States

Client's Goals: Formation and operationalization of management service organization in preparation for potential third-party equity investment.

Our Team's Role: Healthcare consulting, transaction advisory, finance and operations, tax, and assurance.

A prominent otolaryngology practice in the United States sought to establish a management service organization (MSO) to facilitate national growth and attract third-party equity investment. The existing legal structure prevented effective incentivization of top management and limited access to external investment opportunities. Citrin Cooperman was engaged to provide strategic business, tax, and accounting leadership, guiding the organization in the formation and operationalization of the MSO while ensuring a seamless transition and immediate functionality at the go-live date.

Challenges

• Lack of equity incentives for management.
• Inability to access third-party equity.
• Lack of infrastructure to grow into new markets.
• Insufficient cost accounting for services provided to offices.
• Challenges in pricing, marketing, and delivering management services to additional practices.
• The leadership lacked the expertise required to establish and manage an MSO effectively.

Citrin Cooperman's Approach

• Determined key objectives for MSO.
• Evaluated and effectuated the appropriate assets and employees to transfer to MSO.
• Developed equity incentive structure for current management.
• Worked with each administrative department to ensure seamless transition.
• Focused on developing cash flow and accounting functions for MSO.

Results

• Achieved go-live date for MSO within four months of project commencement.
• Seamlessly transitioned operations across two separate companies.
• Issued equity interests in the MSO to management on a tax-free basis.
• Successfully received significant offers for majority and minority equity interests in the MSO.
• Entered into discussions to provide management services to other practices.