Can Selling Be Like Partnering With a Group of Like-Minded Peers?
The CEO of Empower Physical Therapy joins Paul to explain Empower's super group of private practices model, the traits of a strong fit, and how PT business owners should prepare for a transaction.
Full transcript
Generated from the episode audio and lightly edited for readability.
Good afternoon and welcome to another episode of Paul Martin's Crucial Conversations. Today we are excited to have back with us again Steve Dipaola. Steve is the CEO of Empower Physical Therapy. And Empower is a private equity-backed physical therapy company based out of Phoenix, Arizona. They have grown to 43 clinics located in four states, Louisiana, Texas, Arizona, and California. Steve, as always, it is great to have you with us today. Thank you, Paul. Once again, it's always a pleasure to be with you and your team and look forward to sharing some thoughts around our industry.
Awesome. Awesome. You know, Steve, having talked to you many times and Empower having been around for a pretty long time now, we still classify Empower as one of the newer private equity-backed companies in the industry as we have so many legacy companies that have been out there for years and years. And so, again, I don't mean in any way to diminish the experience you have and how long you guys have been at this. But you're still one of the new newer companies. And so, you know, our clients when we talk about, you know, some of the newer companies and acquirers that, you know, are entering into this market, they ask three questions almost routinely.
And the first question that they ask is the strategy for becoming a successful company for this new company and for you for empower in this industry is it any different from the strategies that the larger legacy companies are following? Yeah, you know Paul I don't take any umbrage to that. We like being new and different and maybe not as big as the big guys. So, really appreciate that frame of for sure. Yeah, we do see this a little bit differently than some of the very larger acquirers where I think you know there is a bit of retailness to it that we're really looking for people that are steeped in private practice values, love what they do every day and we continue to really afford them a place to be part of what we consider empower to be which is a super group of private practices.
It's not a large PT group. We do not do things in a homogeneous way. And you know, I think people that are looking for a place where they love to do what they do, they continue to really run their business and be the influential owner that they are today. We would look for them to continue that path forward. And so we really appreciate the fact that we're a group of PTs that sit around the table, make decisions, help each other, collaborate, share best practices. And so for people that really love to run their business, they're hands-on owners.
U that is the right recipe for us because we do not have layers of management. We have several groups of PTs that are involved in different functional areas. And so practice owners that really are looking for that ability to be part of something larger and have a collaborative group going forward are a perfect fit for us, but they're still steeped in their private practice upbringing as are we. So Steve, I didn't mention this, but you are a physical therapist, correct? Yes. Yeah. And so remarkable of you know physical therapists like yourself how you have grown through the ranks in business and now again still as a physical therapist working with other physical therapists you know CEO of you know close to a 50 clinic company so congratulations on that yeah thanks Paul I tell our partners and our people which are mostly physical therapists that while my title is CEO my more important title is physical therapist So you know the second question that we often get asked is what are the characteristics of a target company that would really thrive by joining empower?
Some of those key specific characteristics where are those Steve? Yeah I really think that as we look at the best fit for us and we always talk about that we want to think about really several different layers. So we talk about fit and fit starts with us just as people again because we are really rooted in private practice. We appreciate the interpersonal side of the business both with our therapist and with our patients. So we always say it's a privilege that people trust us to provide their care like any really independent spirited private practice.
We should never ever take that for granted or turn it into a metric. And so people that are passionate about clinical practice, that are really really committed to great customer service and I would say the experience goes well beyond the treatments that we give to people. As we think about providing care, treatment is just part of that care that we give. We want to be able to engage with somebody at a person level and understand them personally, culturally, socioeconomically. And so we really say the best fit are passionate owners and teams.
It's not just the owner and teams that really still defend that, you know, patients first is our mission and that we offer an opportunity for practices and clinics to come and share best practices, collaborate, get help and be part of how we shape our industry going forward. And we want empower to be a microcosm at a small level of where private practice is going in the future. Yeah. Very interesting and I liked how you described it as kind of a collection of private practices still operating somewhat autonomously but obviously with the support of a larger company.
Very attractive. So the nuts and bolts of an acquisition process because the only way these private practices collect as empower is you have to go through you know that acquisition process and would you and this is the third question that we often get asked which is you know empower's approach to acquiring a company is it different from the larger legacy companies as it you know applies to structure process of going through, you know, an M&A event. Yeah. I I'll start at the very root level. And so, as we think about where practices should be, could be to be ready for the process, it is really emotionally knowing that you're ready to take that next chapter in your business and being excited about it versus being really stressed and nervous about it.
So, it is about that fit number one. Number two is practices that are ready for this. I think they have to work at the speed that is comfortable to them. And I'll just say any M&A process is a little faster than any private practice is used to or anticipates. So I would just say the more the practices have kind of gotten there, they're ready for this. They're organized. They have information. They're working with somebody that can preview what it's going to look like and how this process will work.
I think we really see that as helpful as opposed to practices are not quite ready. And those that are not quite ready, we have an appreciation because we've all been in that private practice side of things. And so we say while you're getting ready to continue down the path emotionally process and information gathering is to continue to really be ready because when you flip the switch there and go, there's a lot of activities that have to happen in a timely manner. And we want to make sure that people are still really excited about what they're choosing to do with the next practice next chapter of their practice and their personal lives.
For sure. So really, I would say emotionally getting there, being organized and ready, and getting really good advice from folks that have done this and do it every day, people like yourselves at Martin and other adviserss out there, whether they're small independent groups or, you know, other people that can really serve them well in their best interest. Sure. All right. And you know, you talked a little bit there about preparation and how important that is, but what I also heard you say, Steve, is a little bit of patience.
Patience on the side of, you know, talking to companies and they're not ready till they're ready, right? You know, as opposed to rushing them into being ready to make that decision. But when they flip that switch, as you said, they need to have everything in line to have a delayfree process. Do you find that delays happen with companies that may not be quite ready or quite prepared? Yeah, you're absolutely right with that, Paul. Yeah, we want to be patient. We want to make sure we have a great fit culturally.
We want to make sure we have a good fit business-wise, but when you get ready to go, if you're not organized and really prepared for this, it does create delays and we know that causes stress for practice owners. It is getting materials, information, practice information, people information, legal and financial information together. And I would say as delays happen, it does really increase the anxiety level amongst a practice owner that is really struggling with, you know, is this the right time? Am I doing this? How might my team think about this?
And so preparation like anything is really the key in having things ready because when you make that emotional and professional and practice decision to go forward then really having the organized information and structure and processes in place to be able to present it makes it so much easier. And so delays are okay, but I just know it really ratches ratchets up the anxiety level. And as processes and deals really tend to kind of get close to the end, the delays are often sometimes compounded by the lack of information or having to redo it.
So yeah, it's always great during that time of evaluation, both introspectively and thinking about who the right partner is to take that time to really be prepared both in information and in process. Yeah, absolutely. And you know, I know empower and certainly Martin Healthcare Advisors, we put confidentiality at the very top of our priorities and I know you guys do as well. But we often warn owners that once you start having delay after delay after delay, you know, the chance that the owner in the practice or someone who knows in the practice could slip, it gets higher and higher and higher.
So yes, that delayfree process we find is absolutely imperative, especially in this current market when acquirers like yourself, you have more than one company to choose from. Yeah, that's exactly right. So time and preparation and to be ready and then you know like I said emotionally when you're there really find the best suited partner for you both culturally and business-wise. Absolutely. So Steve, you know with 43 clinics you have a number of former owners within your business and within Empower. How would those former owners describe the culture of Empower?
Yeah. That's really interesting because I think we continue to hear that. They say that and as we have former owners talk to potential future partners that might come on, we really stress that the ability to run your practice the way that has made you successful. And so we think about clinically and practice-wise, very little changes. And as you said earlier, we really like to try to take the administrative help and burden out of a practice owner's lives. And those are all the things, you know, financial, legal, accounting, HR, things that they don't love to spend their time on.
And so we really try to energize former owners and key physical therapists and practice leaders in our group to do the things they love the best and that is delivering great care and great experiences to our patients. It is developing and growing their teams and it is growing the business with organic growth and new add-on growth. And so really the takeaway is people say, "You said nothing will change, but I'm incredibly shocked that nothing has changed." Because they always sit and wait for that day when something will change.
And we really lean on them to be you know key stakeholders to make decisions to give advice again amongst this huddle of physical therapists of where we're going to go next. So I think that's what we hear most is you said nothing is going to change. Yeah. Some slight administrative processes changed to make us more efficient, but how we run and deliver the practice is that super group of private practices. And we love people that really want to spend their time and their energy around all those things that really are growth and and practiceoriented.
So from what you just said, it's fair to say then that a former owner as well as their people kind of their view when they were acquired of what the future would hold for them, which the statement was it really is not going to change significantly. That a year later, two years later, they would still have that view for the future for themselves and for other folks in the company. Yeah, that's exactly right. And I would say the one thing that we do see really positive change around is we have some things that really offer these owners and their people professional and personal growth and development.
So it's not just clinical and CEUs and things like that, but they then now have an opportunity to participate in a practice committee that is the voice of the people within Empower that has a lot to say with what we're doing and where we're going. We have an emerging leadership program that allows, you know, young or experienced therapists that have not spent time developing themselves as leaders to get involved. We have a variety of things, student growth and development that are all really key tenants to our profession that they're allowed to collaborate now with a bigger group and have a have a say, have a voice, and have a path for their people.
I would say practice owners, it is the opportunity for their people to serve the profession and a company that is very private practice driven to be part of some of these things. So while their day-to-day doesn't change, we love to have them involved in some of these professional growth and development paths that maybe you couldn't do with a real small business. Sure. Sure. You know, you heard 25 years ago. I should maybe say longer than that ago. So I don't offend any of the of the big companies, but you know, what's going to happen to my staff?
You know, are they going to leave? Are they going to be upset? You know, that we've sold the company. And Steve, what I'm hearing from you is that essentially things do not significantly change and that there's opportunities that are offered to that rank and file physical therapy staff as well as other professionals and others within the business to grow. Yeah, that's exactly right. And so we know our growth pattern is only supported around really great people that want to serve our profession, that want to step up and do more for empower.
And that is clinicians for sure, but it is also the teams, the admin teams that come along with practices that have done a lot of different things and that really understand that you have to be nimble, you have to be timely, but you have to put that patient and it's and their experience really above everything else. So, we really love the fact that our growth is hinged on having enough really talented, passionate people to drive us forward both clinically and support-wise. So Steve, looking at geography, currently in four states, how does empower determine, you know, what geographies you will acquire and grow in versus others?
Yeah, you know, we're a simple existence right now. So we're southwestbased just because our start was here in Phoenix. But we always really say that we want to think about great practices most likely in the western part of the United States. And while we have a southwest present, we're we're interested in any westernbased PT practices for sure. And we really say as we think about the hierarchy is, you know, how we line up as people, how we think about the profession, do we have a good geographic fit, do our business philosophies and clinical practice align, and then is there a reason for us to go forward?
So, we really get to know people. We we understand that we're not going to be everywhere for everybody. That is not our style. But we want to be really probably a very thoughtful Western United States group that you know can bring other folks in to collaborate and shape who empower is going forward. So Southwest for sure, western part of the United States, that's probably where we end up continuing to grow and develop. Yeah. So, what advice, Steve, would you have for a business that is in the market right now or is preparing for the market?
And what do you think is the most important steps for them to take? Yeah, I would say as you get ready for this because there's going to be a lot of work again emotionally process-wise, diligence-wise is to make sure that you really have a good strength of team right now. So, the team members that you have that they're really on board, they're engaged, they're continuing to deliver great care and run the practice well. And so I think it really starts with having a really solid team, being again culturally, emotionally ready to take the next step to be part of something larger.
I think again there is a difference of selling the business versus being part of something larger and partnering with like-minded individuals. And I think once you're there then I would really say people that are there to really find the way for them to differentiate the opportunities from a business standpoint, from a financial standpoint and then to think about what does their practice look like in the next three years and the next five years. Because we really say we take that I take that as CEO and PT of this group seriously is we want to protect that legacy.
There's nothing more important than what the next three or five years of that practice looks like into the future and how we how we approach that. So it goes back to being ready. It goes back to having a really great team on board and ready to go forward to take on a new chapter of the business and then it is really ready to execute this sort of thing and have again the preparation and the information ready to go and then it just comes down to where is the right fit for you and for your teams.
Yeah, very helpful. Very very helpful. Steve, I really appreciate you taking the time to come and talk to us and you always have great information for our listeners. You have stayed steadfast in, if I can go back to one of the first videos, you have stayed and maintained steadfast in building private practices, collecting private practices as a means for those private practices and their people to be able to grow and thrive in the markets that they serve. And I congratulate you on that and seek keeping that course.
And I appreciate you taking the time with us today. Yeah, thanks Paul. We really are appreciating this journey and we look forward to always sharing any information with you and the great private practice owners out there. It's a great time for us to think about the PT first environment and how we continue to really elevate the profession that we love. Yeah, Steve, thank you. And for any of you out there today that have questions about the discussion that we had today and that I had with Steve Dalo today, just click below.
Let's talk. If you have a conversation or a discussion point that you would like for Steve, I will put you right through to him. And I appreciate you joining us today and I look forward to talking to you in the future. Thank you. Thanks, Paul.
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