Frier Levitt partner Brandon Zarsky was featured in a recent podcast episode with Nuco Filings, exploring how mergers and acquisitions in the applied behavior analysis (ABA) space underscores a shift many providers underestimate: compliance is no longer a back-office function. It is a core driver of valuation, deal structure, and buyer interest.
The discussion highlights how buyers evaluate risk across governance, billing and coding practices, audit history, and operational discipline long before a transaction reaches closing. In today’s environment, these factors influence whether a business is viewed as a scalable platform opportunity or a higher-risk bolt-on acquisition, ultimately shaping pricing, diligence intensity, and post-closing protections such as escrows, indemnities, and deferred consideration.
The buyer type plays a critical role in how risk is assessed. Private equity platforms, strategic acquirers, and add-on buyers each approach compliance differently, but all treat it as a key underwriting factor. Governance issues (including operating agreements, ownership structures, voting thresholds, and potential “rogue owner” risks) are often among the first diligence items reviewed and can delay or derail transactions if not addressed early.
Certain compliance gaps can be remediated late in the process, while others (such as unresolved investigations, structural billing concerns, or entity design issues tied to MSO and corporate practice of medicine rules) are far more difficult to correct once a company goes to market. As a result, proactive sell-side preparation, including internal coding audits, clean contracts, active licensure, and quality-of-earnings support, can materially impact valuation and deal flexibility.
The episode reflects a broader trend across healthcare transactions: compliance readiness increasingly signals operational maturity. For ABA providers considering a sale or expansion, building a defensible compliance framework years in advance can reduce risk, accelerate diligence, and position organizations for stronger deal outcomes.
Watch the full podcast here.
