Case Study

Colorado’s Top Cardiology Practice Solves Fiscal Puzzle in a Heartstopper!

Case Study Details

Financing Type:
Sale Leaseback
Colorado's Top Cardiology Practice Solves Fiscal Puzzle in a Heartstopper!

How does Colorado's preeminent cardiology group go from contemplating the sale of its iconic building to executing a new strategy that benefits all partners in less than a year? Through a highly innovative financing package that leveled the playing field for every doctor in the practice. This was an outcome that could have only happened with great leadership from the group's long-standing executive, its savvy medical director and the expertise and persistence of a determined team from CMAC Partners.

 Why sell?

 It seemed like the best possible alternative at that moment. South Denver Cardiology (SDCA) had run into two primary issues.  The first was that there had been a substantial buildup of equity that had not been realized by the longtime owners.  The second was caused by the unique waterfall ownership structure that allowed for the second set of members to buy in without cash equity, creating some real complexities as the third group of partners considered membership.  The system involved layers of distributive rights.  The mounting concern was that inequities between ownership levels could begin to divide the objectives of the group as a whole.

 The Solution

Ironically, it was SDCA's original developer who introduced CMAC Partners to SDCA with the objective of finding a solution that would allow the group to maintain its ownership in the building. The only way to reach this outcome involved assisting each of the current ownership levels to capitalize on their respective equity buildup and bring in the new partners at a minimized equity requirement. 

After several months of hard work on all sides, CMAC was able to present proposals that provided a truly exceptional outcome. In the end, the original partners were each able to receive a very substantial distribution. The second level of owners also received a good sum of cash while applying sufficient value to equalize their standing with the original owners. Finally, the newest level of partners came in with a much smaller equity need and all members are now able to enjoy the same benefits moving forward.

The extraordinary part of this financing was that CMAC was able to structure this unique and highly competitive package with SDCA's own incumbent lender. This was a great example of what good people working together can accomplish. While CMAC may have found the path, it was the long-standing relationship between SDCA and its lender that made the problem-solving journey possible and created present value savings in interest expense of more than $1.5 million along the way. Now that's teamwork!

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