James M. Berklan

Summer’s coming and that always means one sure thing: You’re liable to get wet if you’re in the wrong place.

If your chair has ever been near the edge of a kid-friendly swimming pool, you know what I mean. Every neighborhood, every pool always seems to have its own “cannonball” artist. You know, the guy (and it’s almost always a guy) who takes running jumps into the water, knees grasped in arms, intent on displacing as much water as possible. Points awarded are commensurate with the number of sunbather scowls coaxed.

Well, get ready for your own cannonballs hitting the water as the weather continues to warm up, long-term care players. Whether you get wet or not may depend on how well you’ve run your company lately.

There are liable to be numerous splashes in the merger and acquisition market in the coming months. Just as tourists are going to venture more freely onto the beaches and pool decks of America, we’re going to see investors venturing from the sidelines more and more — willing to get far more than just a toe wet.

The pent-up demand seen for single-family housing in so many markets right now is being mirrored in senior care. With a few twists.

In fact, it’s already a “record” time for acquisition and affiliation activity, noted Ziegler President and CEO Dan Hermann on Wednesday. There’s more to come, he added. Other analysts echo his sentiments. As the pandemic fog of the last 14 months continues to burn off, expect healthy survivors to become more active.

Cheap capital is one reason some players, for-profits in particular, will be strolling the aisles with shopping lists in hand. Another is the fact that there are so many wounded LTC players.

Some will emerge OK, thanks to federal programs that have propped up much of America. But for some, those stimulus dollars still will not be enough. Just as numerous small businesses continue to face uncertain futures or close, members of the senior care business community are going to face more financial peril with emergency federal funding fading away.

One of the most interesting facts from Hermann and colleagues this week is that while many operators have suffered, well-organized top performers have thrived. In fact, the best ones managed stimulus funding so well, they had more cash on hand at the end of 2020 than the end of 2019, a non-pandemic year. 

The story line that the “little guy” is going to fade away has been around for at least 20 years. There’s no question, however, that COVID-19 has put a little extra oomph into that theory.

This year, it could mean that, unlike restaurants and some other firms, smaller or mid-size properties are merely going to change hands. A lot of merger and acquisition activity might simply indicate the waters have been extremely choppy and survivors are out picking up those barely hanging on.

It should be interesting to keep a sunglasses-covered eye on. Just look out for that kid running toward the pool if you’re sitting too close to the edge.

Follow Executive Editor James M. Berklan @JimBerklan.