The Hire That's Eating Your Exit

The Hire That's Eating Your Exit

Subtitle: Your next BD hire isn't a $300K decision. At 12x EBITDA, it's a $3.6M enterprise value decision. Most boards aren't doing that math.

Tuesday I broke down how the best platforms build sourcing pipelines that keep them out of auctions.

The question that always follows is the harder one: who actually builds this, and what does it cost?

That question is the whole problem.

When a PE-backed platform decides to build BD and sourcing capability, the instinct is to hire. Post for an AVP or Director of Business Development. Someone with healthcare M&A experience who can build the function from the ground up.

It feels like the serious move. The board likes seeing headcount aligned to the growth mandate. The CEO gets to point to a hire and say the pipeline is being addressed.

But the math underneath that decision is where it falls apart.

A Director or AVP-level BD professional with actual healthcare transaction experience runs $150,000 to $220,000 in base compensation. That is the floor for someone who has sat in the room on these deals and knows the difference between a 5-location tuck-in and a platform anchor.

Add a 20 to 30 percent bonus target. That is another $30,000 to $66,000.

Then layer in the employer side. Benefits, payroll taxes, and overhead run 25 to 35 percent on top of base compensation, per the Bureau of Labor Statistics' Employer Costs for Employee Compensation data. That adds $37,000 to $77,000.​

The fully loaded Year 1 cost for one BD hire lands between $220,000 and $360,000. Before they have sourced a single deal.

Now add the infrastructure they need to operate. CRM licenses, data subscriptions, travel budget, marketing collateral. For a healthcare-focused BD function, that layer runs another $30,000 to $50,000 per year.

Total real Year 1 cost: $250,000 to $410,000.

And here is the part most teams undercount. That hire is not productive on Day 1. They need to learn the platform's thesis, the target geographies, the specialty dynamics, the physician personality types in your markets, and the competitive landscape in every MSA you care about. Realistically, 3 to 6 months pass before a new BD professional is operating at full capacity in a new platform.

Every month of ramp is a month the pipeline is not moving while the platform pays full freight.

This is where operators miss the bigger picture.

That BD hire sits on SG&A. It comes directly out of EBITDA. Take a platform running $15 to $20 million in EBITDA. A single $300,000 BD hire represents roughly 1.5 to 2.0 percent of EBITDA margin compression.

That sounds manageable in isolation. But PE-backed healthcare platforms do not get valued in isolation.

FOCUS Investment Banking's 2026 healthcare dashboard shows that platform-level healthcare services transactions commonly trade in the range of 10 to 14x EBITDA depending on specialty, scale, and growth trajectory. Sofer Advisors' 2025-2026 valuation guide confirms similar ranges for scaled platforms.

At those multiples, every dollar of SG&A costs $10 to $14 in enterprise value at exit.

So that $300,000 BD hire is not a $300,000 decision. It is a $3.0 to $4.2 million enterprise value decision.

And the people who feel that math the most are the ones sitting inside the platform. S&P Global reported that average PE hold periods have stretched past six years in several sectors as of 2025. Many healthcare platforms are in year 4, 5, or deeper with no clear exit timeline. Every dollar of unnecessary overhead compresses what the equity holders on the management team actually take home.

If the hire works out, the math is painful but justifiable. If it does not, you have burned $250,000 or more and 12 months with nothing to show for it. And BD roles carry higher turnover than most platform operators expect, because the people good enough to build this function from scratch are also the people with the most options.

Even if the hire works out, one person can only cover so much ground.

In the deals I have worked on, a single BD professional in healthcare M&A can actively manage 20 to 40 target relationships at a time. That includes research, outreach, relationship cultivation, and follow-up. These are 6 to 18 month relationship arcs with founders deciding whether to sell something they built over 20 years.

If the platform's addressable universe is 200 to 500 targets across multiple states, one hire is covering maybe 10 to 15 percent of the market at any given time.

Meanwhile, the platforms with systematized approaches are touching the full universe. They built the target map before they staffed against it. The result is a structural information advantage that one BD hire, no matter how talented, cannot close alone.

The platforms that move fastest do not choose between "hire a team" and "do nothing."

They build the infrastructure before they hire against it. Concretely, that means: before a BD hire ever starts, the platform already has a ranked target universe of 200+ names scored by strategic fit, succession timing, and competitive positioning. It has a monitoring layer that flags when a founder is approaching retirement age, when a competitor closes a deal in an adjacent market, when a group's website quietly drops a partner from the About page. It has outreach templates and a sequenced contact cadence built around beachhead targets, tuck-in opportunities, and watch-list names.

Some of that is technology. Some of it is process design. Some of it is fractional expertise that delivers the analytical infrastructure without sitting on SG&A permanently.

The goal is not to avoid hiring. It is to make sure that when you do hire, that person walks into a functioning pipeline on Day 1. They open their laptop and see 15 priority targets with contact paths, competitive context, and a recommended approach sequence already built. They are executing, not researching.

That is the difference between a $300,000 bet and a $300,000 investment.

Tuesday's piece was about the pipeline. Today's piece is about the cost of building it wrong.

The platforms that win are not the ones that spend the most on BD headcount. They are the ones that build the pipeline infrastructure first and put a person behind it second.

The gap between "we need to hire someone" and "we need to build something for them to run" is where most of the enterprise value leaks.

Next week: what the first 90 days of a systematized BD function look like when you build it right.

If you are building a healthcare platform and weighing the hire-vs-build question right now, I would be happy to talk through what the system looks like for your specific market and thesis.

Healthcare M&AI

-Shawn