This episode of The Compliance Advantage features host Ross Ronan in conversation with Jerry Chang, a Managing Director at Stout, who brings 30 years of experience in healthcare valuation and financial advisory.

Key Takeaways

• Compliance as a Strategic Asset: Compliance often gets filed under “cost of doing business.” Jerry argues that a robust compliance program is a genuine driver of enterprise value.
• Valuation Functions: Jerry breaks down valuation advisory into three core functions: measuring value (e.g., defensible opinions for transactions, litigation support, financial reporting, and tax compliance), protecting value (e.g., defending against litigation, regulatory scrutiny, or reputational damage), and recovering value (e.g., dispute resolution and bankruptcy settings).
• Fair Market Value (FMV) vs. Commercial Reasonableness: It is crucial for businesses to assess both. While an arrangement might meet FMV, it must also make business sense to be considered commercially reasonable (e.g., having excessive medical directorships is not reasonable, even if the pay rate is fair).
• The Importance of Due Diligence: Both experts highlight the dangers of being unprepared for deal diligence. Jerry advocates for a “go slow to go fast” approach, engaging counsel and valuation experts early to identify “landmines” before they threaten a transaction.
• Operationalizing Compliance: Simply obtaining an initial fair market valuation or creating a policy is not enough; these must be integrated into daily operations and refreshed regularly to avoid relying on outdated documents and to ensure ongoing compliance.

Watch the episode of the podcast on YouTube or on the Compliance Advantage website.