Are You a Strategic Fit for an Acquirer?
Paul revisits his interview with Spine & Sport Physical Therapy's VP of business development on strategic fit, avoiding deal delays through preparation, culture, career pathways, and student programs.
Full transcript
Generated from the episode audio and lightly edited for readability.
Good afternoon and welcome to another episode of the Martin Rehab M&A advisory. Today we're going to take a look back one week to our discussion that we had with Rick Katz. Rick, as you recall, is the vice president of business development at Spine and Sport Physical Therapy, which is a private equity-backed physical therapy company based out of San Diego, California, and has grown to 35 plus clinics. This is a again a continuation of our series of some of the newer companies, most recently backed private equity-backed companies in the industry and what they're up to.
So certainly continuing in the series of new acquirers, this is another example of how different these companies are. You know, they're looking at acquisitions that are a strategic fit and that the strategic fit Rick believes is somewhat different from the larger companies which is you know more growing ITA adding on they're looking for very specific strategic fits and I thought this was very unique is that you know Rick is comes out of education Rick is a physical therapist ist Rick comes out of private practice and what he described is they're looking to get a vibe from a clinic to make sure that it's a fit.
It's kind of a feeling in the company that they're acquiring and what vibe they get from that clinic. My question from you for you is what vibe is in your clinic when you walk into your clinic. Is there a vibe of people introducing themselves? Is there a vibe of confidence? Is there a vibe of you know someone that is leading that charge within your clinic? So that's what you know Spine and Sport is looking for that vibe. Now they're backed by GreatPoint Partners and Greatoint Partners is their financial partner, their private equity group.
Now, this is a big advantage for Spine and Sport because Greatoint Partners was already a private equity-backed company for professional physical therapy on the East Coast. So, it will enable them to explain things about the rehab industry and about a business to great point much easier than maybe some of the newer groups. You know, Rick discussed that one of the things about their process is that they try to avoid delays and he can see that many times once a process is delayed, many times it just doesn't get to the finish line.
And so what can we do on the front end in order to avoid a delay with any of these companies? And what we commonly tell folks is that we have to be prepared. And being prepared is not simply having financials, having operations, having your payer, having your referral data accessible, but making sure that data is in a format as well as in a methodology that you can easily and quickly show it to an acquirer so that they can get to value quickly. So, a stack of a paper or even a bunch of emails with spreadsheets etc.
It really needs to be in a nice program outline what we call confidential information memorandum so that company can very quickly get to value and not have delays. You know, another thing that we discussed was culture. And I thought this was very interesting is that, you know, Rick was very open in that they are still trying to embody what their culture is. And what they believe their culture is it's forward thinking. It's where are we going to be next? And you know, I really think that's an important lesson for all of us because, you know, many of us really don't know what the culture is in our company.
And if we can embody what it is today and then where we want it to be, we then have our work cut out for us. And I think that was the point that Rick was making is that they want that forwardthinking culture and they're still working on that. You know, another thing that they have put into their business that I think, you know, even companies that are smaller can consider is they have de they have developed management and clinical pathways for new staff when they come into the business so that you can see where you could advance from a management level as well as from a clinical level.
Now, I think this is really valuable not only for a business the size of spine and sport but for small business as well. What is our biggest challenge today for most of us? It's hiring. It's getting staff. And I think that is a big plus for staff when they can see their advancement and they can see where they're going. Another big point that Rick made was that they have an extremely strong student program and they utilize that student program definitely for education definitely to be a part of universities etc.
But they also use it as a way to recruit and this is the best way to hire and recruit therapists. We commonly talk to companies that have no issues with staffing especially with professionals. They have a student program. You know, currently I think spine and sport would describe themselves in terms of geography as California experts. And believe me, and Steve made note of this, that is not an easy thing to be. California has many challenges and having become an ex having now they now have become an expert in California, they are looking at other states, but they're not afraid of other states because they believe they've overcome the challenges in California and that they can do that in just about any state that they would go into.
You know, we had a really good conversation with Steve and again, the uniqueness of spine and sport, I think, just is what excites me and should excite you about the industry that we have out there today for physical therapists, business owners that are looking to partner. If that's you, click below and let's have a conversation. Thank you.
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