At the beginning of the year, Bravo Wellness was bought by Medical Mutual.

“We weren't looking,” says Jim Pshock, Bravo Wellness’ founder and CEO. "We weren’t for sale. We didn't have a banker or anything like that."

He says he did, however, anticipate that there would be some type of strategic exit coming soon, because the company's private equity partner had invested in 2014.

Bravo Wellness was approached by Medical Mutual after its long-term wellness partner was acquired by one of Medical Mutual's competitors. The insurer was looking to refresh its wellness platform, so the timing made sense on both sides.

Pshock says Medical Mutual CEO Rick Chiricosta reached out to Bravo, saying he would love to bid on being the company's partner — so ideally, it’s paying itself and not a vendor for wellness services.

"While I wasn't looking, I also am a big believer in a saying that goes, ‘Success occurs when preparedness and opportunity meet,'" Pshock says. "We weren't looking, but we were prepared if the right opportunity came along, and things actually went very smoothly."

Pshock spoke on the Smart Business Dealmakers Podcast about how his company prepared for a surprise deal with Medical Mutual.

Listen to the full interview

Laying the mental groundwork

Preparing Bravo for the deal meant getting the company's financial house in order — making sure it had clean financial audits, that its technology was tight, that HIPAA privacy and security audits were done and that there were no pending lawsuits or lurking employee issues.

"Setting up a data room and going through due diligence can be, at a minimum, a major distraction to your business,” Pshock says, “but it can also blow deals up if it's really not well run."

Pshock had been laying the mental groundwork for a deal, talking with his board about what would cause the company to accelerate its plan. There had been lot of consolidation occurring in the industry, and Pshock was watching competitors being gobbled up by big PE firms, which then typically cut staff.

" I knew I didn't want that," he says. "So, my eyes were just open for the right strategic partner that would help us really fulfill our mission, versus just take a bunch of money and not care what happened."

Don’t get greedy

Medical Mutual approached the company in early 2019 — a dinner between Pshock and Chiricosta — to see if there was the right chemistry and a good cultural fit, and to make sure that both sides understood the goal of the pursuit. There was a letter of intent by August, and it took about four months to close.

Pshock was relatively new to M&A, having learned about dealmaking through the initial private equity deal he took in 2014. It was a whole new language, he says, but from that experience, heading into the Medical Mutual deal, he took lessons.

"Don't get greedy," he says. "If you keep thinking the only goal here is to get more, you're really never going to get a deal done. You need to have a reasonable expectation around your business and know what a fair arrangement looks like. I learned that from the previous deal and absolutely it helped me with this one. And know that it's not just about the money. It's what's going to happen to my people, what's going to happen to our customers, what's going to happen to our investors, how does this serve my family? Having that on paper and knowing that you can look and say, ‘How many of the boxes does this deal check?’ was a key lesson that I think helped this go as smoothly as it did."