📖 Approx. 3 minutes ／ Updated 2026.06.12
In this article, an M&A advisor specializing in the healthcare industry provides a practical perspective on how corporate splits become a key issue in business succession and medical M&A involving the transfer of licenses and permits. We will outline specific measures based on notifications to public health centers and the Regional Bureau of Health and Welfare, avoiding gaps in operations, and the constraints and utilization of the Medical Service Act.
1. Industry Background of Corporate Splits and License Transfers
According to the Survey of Medical Institutions by the Ministry of Health, Labour and Welfare, the business environment for medical institutions, including the transfer of licenses and permits, has become increasingly challenging in recent years due to a combination of factors such as medical fee revisions, rising labor costs, and the burden of capital investment. In particular, interest in third-party succession M&A is growing from the perspective of notifications to public health centers and the Regional Bureau of Health and Welfare, as well as avoiding operational gaps.
At the same time, corporate splits are a crucial point of discussion in medical M&A practice. By appropriately designing the transaction while considering the constraints and utilization of the Medical Service Act, a succession that benefits both the transferor and transferee can be achieved.
2. Key Practical Points
- Preparation: Organize the workflow, patient base, and equipment status unique to license transfers, and clarify the terms of the transfer.
- Valuation: Calculate an appropriate range for the transfer price based on the characteristics of the clinical department. In license transfers, notifications to public health centers and the Regional Bureau of Health and Welfare, as well as avoiding operational gaps, are key to the valuation.
- Designing the Corporate Split: Select the optimal scheme based on the constraints and utilization of the Medical Service Act. Verification from tax, legal, and labor perspectives is also required.
- Buyer Search & Matching: Select prospective buyers matching the clinical department’s characteristics from a nationwide network. Carefully align the desired terms of both parties.
- Due Diligence: Conduct thorough investigations from financial, legal, labor, and medical practice perspectives. Confirm the licenses, permits, and facility standards unique to license transfers.
- Final Agreement & Closing: Execute the final agreement, including representations, warranties, and indemnification clauses. Proceed with license transfers and staff announcements in parallel.
3. Specific Considerations in License Transfers
In medical institution M&A involving license transfers, notifications to public health centers and the Regional Bureau of Health and Welfare, and avoiding operational gaps are the keys to a successful succession. There are numerous individual issues depending on the clinical department’s characteristics, such as the continuity of the patient base, employment retention of staff (physicians, nurses, co-medicals), equipment condition and replacement plans, and the maintenance or acquisition of facility standards.
In addition, strategic design based on market characteristics unique to license transfers is crucial, such as the mix of insurance-covered and self-pay services, the status of regional medical cooperation, and relationships with neighboring competing medical institutions. Leveraging our track record in supporting successions involving license transfers, we assist with practical operations from an industry-specialized perspective.
4. Practical Details of Corporate Splits
Corporate splits are an area that requires specialized consideration in medical M&A. Designing the transaction based on the constraints and utilization of the Medical Service Act is the key to success.
- Review of Relevant Laws and Practical Standards: Compliance and preparation based on the Medical Service Act, tax laws, and labor laws
- Collaboration with Experts: Working alongside certified public accountants, tax accountants, attorneys, and labor and social security attorneys
- Risk Assessment: Identifying potential risks and formulating response policies
- Consensus Building Between Parties: Designing mutually agreeable terms for both the transferor and transferee
- Proper Documentation: Clearly specifying terms in the letter of intent (LOI) and final agreement
Frequently Asked Questions
Q. What documents are required for the consultation?
A. It will facilitate a smoother process if you can prepare financial statements for the last three fiscal years, trends in patient numbers, staff composition, an equipment list, and lease agreements (if applicable) in advance. We will collect these after executing an NDA.
Q. What is the average transfer price for a transaction involving a license transfer?
A. In license transfers, notifications to public health centers and the Regional Bureau of Health and Welfare, as well as avoiding operational gaps, serve as the valuation benchmarks. As a general guideline, clinics without beds are valued at 0.5 to 1.5 times annual revenue, while clinics with beds or hospitals are valued at 3 to 7 times EBITDA. We can provide more details through our free preliminary valuation.
Q. What should we keep in mind when proceeding with a corporate split?
A. Prior design based on the constraints and utilization of the Medical Service Act is essential. Flawless execution in collaboration with experts is the key to success.
Q. Will our staff or patients find out about the consultation?
A. We only disclose limited information after executing an NDA, and no disclosures are made to stakeholders prior to the final agreement. Strict confidentiality is maintained.
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Contact M&A Medical for Consultations on Corporate Splits and License Transfers
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