Do Larger, Marquee Sellers Have Different Needs During the M&A Process?
Darren Tucker, CEO of Peak Physical Therapy, shares how he built a 13 clinic company with data and systems, and what led to his partnership with Confluent Health as a larger, marquee seller.
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 going to have a crucial conversation with Darren Tucker. Darren is a physical therapy assistant and the CEO of Peak Physical Therapy. Peak is a 13 clinic company in Idaho and Washington State. And back on December 31st, 2021, Peak Physical Therapy entered into a partnership with Confluent Health. So, congratulations, Darren, and welcome. Well, thank you. Thank you. And thank you. It's great to have you. Really great to have you. So Darren, what I want to talk to you about today is a little bit of the difference and uniqueness of what we would consider a marquee company in this industry.
And like it or not, you are a marquee company in this industry at 13 clinics and real strong cash flow. You are certainly in that marquee division for sure. What was your let's go way back. Let's go way back. What was your plan and vision for your company when you decided to go into private practice? Yeah. You know, I think initially like most I just wanted to work for myself because as you start you know clinic or practice you have your own ideologies, your belief systems you know and you want to be able to you know put those very things into your own practice.
Now, was growth a part of our future plan? Without a doubt. I think we're all competitors in the private, you know, it's just private business. And so, as we laid the foundation, the beginnings just in even our name selection, we did we chose something neutral, wasn't tied to our name, wasn't tied to our region, wasn't tied to our state. So, if and when we had the opportunity to grow, we weren't self-restricted. And then we weren't obligated to if our name was on the shingle to maybe always have a presence.
So you so you really knew from the very beginning when you went into practice that you would be a multic clinic and at some point potentially a multi-state company. Is that what I'm hearing from you? Well, I don't know if I knew that, but I think I wanted that. You know, I just pushed all of our chips to the middle and said, "Let's just play the game and hope it goes well." Yeah. So, walk us through a little bit on how you built this business and where it was kind of before you decided to find a bigger and a larger partner.
Yeah. Yeah. So, you know, like life, it's a lot of trial and error. And so, as we went into our business, the first two years pretty painful. So you know how I look back on that is I think is with as a practitioner you know you can be a good practitioner or a great practitioner but that doesn't make you know fit to maybe govern the business because those things aren't the same. And so I found when we started the practice we gave our practice what we wanted it to have and it's not what the business needed.
I mean, we struggled for the first few years for sure and we just really couldn't figure it out until we, you know, and I was I'm a numbers guy, you know. I have spreadsheets all over the place, but we didn't look at them very often and we didn't make decisions by them. And so, I just knew that we needed more information. I needed more education than what I currently had when it came down to the industry. And so, we reached out for more help. And I was reaching out for not supporting what we were doing.
Well, I was looking for what do I not know and what am I doing poorly that is making me suffer at this level and so that's where you know objective management really you know comes in pivotal huge piece so you know as I work my own staff and even you know as I think to myself I really encourage you know practitioners or business owners treat your practice like you treat your patients you know you want to identify first what's going well and what's Not you want to objectify everything because as you so well know you've said it a thousand times if you cannot measure it you cannot manage it you know and then establish a plan and modify that plan all the time frequently and so we you know I took home as we start some of this training all the you know those light bulb moments that go off for you know owners or pds that seek you know consulting or help or education.
Oh man, the light bulbs are going off left and right and all our undones are coming to the surface like, "Oh my gosh, I'm such an idiot." Excellent. Because it gives us that opportunity to grow. So really, I started to dig on the data, dig on the data hard where I would take back in the paper chart world, I would take all our charts, hope, and I would go over I look for patterns and I think everything in life has a pattern. There's a pattern to everything.
And we just maybe sometimes don't see that pattern. So I was looking at scripts, referrals, who's referring, who's showing up, who's cancelling, who's no showing, looking for maybe some common denominators that we could control, and you know, and then I started to see a pattern emerge. And so we started, you know, write our system, sort of the organization, things that we could follow. So I equate that to a recipe. If you give me a recipe to bake in a cake or anything else, if I'm off the rails, it doesn't turn out, I just have to find out where my recipe is wrong.
What I omitted or maybe what I did in addition to that was unnecessary. So, we created, if you will, systems that allows us to have that management oversight and self-correct. Doesn't mean we're not, you know, good people if something goes wrong. Just means we just did do something that was maybe as right as it could be. And that made a substantial difference. So it took us from the world of I hope we're doing things right or I think our business needs this to now I deem it as macronutrients.
We have carbohydrates, proteins, and fats. We have things that are vital for survival, let alone thriving. And once we identified those, let me tell you, it you it's not even comparable. And so you know we started to get into you know growth from you know startups or even acquisitions and of course through everything you do you know yeah pain's a teacher you know it's a sense and so it just called you know allowed us to evolve so you know our policy books if you will I just dee them our book of failures because whatever if something doesn't go right let's just call it is what it is and then put in some successful action that maybe would be better.
And so it just allowed us to, you know, become a little bit more fluid with our actions. And with, you know, business, it's all numbers to a large degree. It allows us to make sure that we're not, you know, underperforming or even overstaffing because we are underperforming because I like to say with management, you know, we often just overstaff inefficiencies. Yeah. Rather than fix them. And so that got us to the point to where, you know, resources run thin as does time. And if we want to continue to raise the bar or pursue, you know, those that next level, I you know, everybody needs help.
Yeah. That's our field. We're in the healthc care field. And so it's like, yeah, you know, it's time to start courting or looking. Yeah. Darren, you know, a couple things that you said in there really jumped out at me. One was, you know, we need to objectify what we do. And, you know, and the second was that once we've seen and we've, you know, put these objectives into place, now we need systems to actually carry them out, right? And I really believe Darren while yes some more locally focused business owners are doing that probably not to the level that you have done that through the years to have created what you have created which is not just numbers of clinics and amount of EPIDA or any of that but you've created something really special that I think my sense has always been to work in your company would really be a great place to work And I think sometimes we do that, you know, the lack of systems in an interest of being liked or liked or not being maybe perceived as overbearing, you know, micromanagement, you know, but we quickly found out that if people are all doing things their own way, I just created my chaos.
I can't manage randomity and so it's like oh no with a good heart you know and good you know philosophic direction we just all have to be on the same page you know so that you know we have that sanity and then we can we are better position to help you know you know employees or employees heck help us. Sure. So Darren, you've been building your company and at some point it hit you that you were ready to find a larger partner. When was that? And give me that kind of a repeat go back on what that thought process was.
Yeah. You know, and this was it was 2014. I'll give you a specific date. You can still see it when I when that decision came into my head. Because I was we just did an acquisition and it was in remote areas of Idaho and it required me I ended up commuting for two years and it's a six-hour drive. So I ended up staying up there with my in-laws. So I moved back home so to speak, you know, and we're getting that clinic on it on its feet and doing well.
But as I continued to look down, you know, through the telescope of just what our company, what I wanted to be, I just knew that I couldn't continue to displace myself at that level and that I didn't want to rush, you know, into a decision of that magnitude. So, I started conversations back in 2014. I started talking to, you know, scouting out some of the big players. I started talking to some, you know, private equity firms. I had brokers calling me. But I just wanted to make sure that I aligned myself with the right people because every business owner, oh my gosh, you know that we you work so hard.
You bleed from the eyes. You commit I mean your life to you know the success of your clinic. Your your family is dependent on the success. So I wanted to make sure that when I did make the decision it was the right decision. And then as I continued to grow our organization, it was done in a manner that would be highly attractive to buyers. So in all those conversations, even those conversations where, you know, maybe it's not going to be the right fit, what do they look for?
What do they like? What don't they like? And then I looked across the different platforms and looked for what they all had in common. What do they all have in common? What do they all look for and want? So that when we decided to make that decision, I'd be well, highly attractive, you know, like I think your team said that be the prettiest girl at the dance and so I began that in 2014 and then as things got closer then I did some onampus visits to where then I could really, you know, with them get a feel for not necessarily just their organization but the people behind their organization because in the end work is work and I want to like the people I work with and if you know I walked out of some meetings if you will that maybe you know their platform was fantastic they had a lot to promise but things didn't resonate that culture fit I thought you know I think I'm going to do more harm than good.
So I gave myself yeah seven years to go through that process. Not that it has to take long. I knew that I wasn't ready then, but I better become ready in case of the market as it is. When the market's ripe, you want to be ready. Sure. So, as a and I'm going to call you this again, a marquee company, marquee business owner, what do you believe you were seeking different and what you believed should be available for you based on your size, scope, and level of your company?
Yeah, you know, I was looking for compatible resources. I guess if I have to boil it down, compatible resources. So, number one, it comes on the resource size side of things, you know, as you as we're all multi-headed. You have to be, you know, multitask things as you grow things because I don't want to over staff because that hurts your bottom line and you know, it creates inefficiencies at times and I don't I I'm not learning what I need to learn if I hand it over too soon in my opinion.
So, I'm looking for resources because I did reach that point of work saturation like oh my gosh, I can work long and hard but I'm running out of time in the day here. So that becomes, you know, evident just based upon how you feel, you know, the burdens that you carry. So I'm looking for the resources that could unweight me in areas because I like to say we've been when you do things yourself all the time, we're playing the game with one hand tied behind her back.
So I wanted to be have, you know, tee up with an organization that could bring to the table some valuable resources but not change who I am and who we are because our company got to where it is based upon what we believe in. So you know we only do what we believe in. It's a game of philosophy and so that compatibility and then you know extremely enormous I would say more important than say even the resources because every big organization going to have resources but just that human compatibility piece number one how are the individuals upbeat positive you know easy to collaborate with and then you know ideology wise does that organization you know really truly believe in you know a certain ideology is that ideology parallel to ours because that's how we write our policies and our procedures is based upon an ideology.
So I needed that company to really be compatible with the individuals and with the philosophies and then have resources that would unweight us because now as we cross that bridge. Yeah. Now it's time for us to truly hit our stride to evolve as we've always, you know, become that organization that we've always wanted to be, but we've been a little bit self-limited. Yeah. Yeah. I love that word you use, compatible resources because as you said, there are many companies that are offering resources and but very specific to your company and to the level in which you have built your company.
Not all the companies out there with resources brought compatible resources for you and yeah, I think great thought process on how to get where you need to get for a company like yours. Thanks. It was on accident. So look, when somebody has accomplished what you have accomplished in your business, it does kind of raise the bar on who you're willing to work with and move forward with. Talk to me a little bit about, you know, kind of the bar level you had on, like you said, you explored over many number of years.
How did you eliminate and keep in companies as you moved through and wanted to start a process? Yeah. And so this where it'll be you know some of the information coming up I as I reached out over the seven years I got you know I started to network you know and I started to you know find my people I thought would be you know compatible or might be you know good possibilities but I knew that you know gosh the landscape of rehab is much larger than I can access without a doubt and so that's where you really start to think, yeah, I think I need more than what I have.
So, you know, that's where I reached out to Martin Healthcare because, you know, I need more information. I need more information and so they can go fishing for me because we are fishing. We're we're out there fishing for, you know, you know, a good catch. That is it's a win-win because, you know, for this process, you know, I definitely wanted to make sure I brought resources that were compatible. Why? So I can continue to grow my organization because I we all have a fire in our belly and we want to make sure that you know each decision that we make you know gives us this next tier of growth.
I just know I need help in that regard and I need, you know, external help to bring more options to my plate because I want to grow and when I find that relationship, I want that to be a win-win because I think that is the right thing to do and that compatibility. If if someone comes to me and is willing to give me an opportunity to partner with them, I owe it to them to grow. So, I want to make sure their visions for me and for themselves, you know, are compatible and so I would say, your team stellar job of going out there and looking, you know, east coast to west coast through all those people that would, you know, fit my profile and then with some conversations through the process of, you know, phone calls or Zoom meetings.
Yeah, we got to have some, you know, coffee dates, you know, some nice chitchats that allowed us, you know, to narrow the funnel to where, you know, we had a serious crew of people that we could really, you know, visit with more intimately to find out which one would be the best. And I like to tell even my own my own, you know, company, my own staff, this decision transcends just me. My company is much larger than I. So, I want to make sure the decision that I make impact in a very positive way everybody that I employ because my company's going to be around just like you know your previous company or any owners.
It's going to be around much longer than the owner themselves. So, I wanted to have this be a very much a pay it forward action. Pay it forward for my family, a pay it forward for my staff and a pay it forward for the organization that chose to partner with me. So I mean it should be a win-winwin and I just needed I needed a larger pool to choose from than you know what I was able to first person you know find myself. Yeah. You know Darren the way in which you went through educating yourself and as I think you had noted you said you were really networking right?
You're you were networking with some of the largest medium smaller acquirers in the country getting to know them. How you did that and still built this company at the same time, I will never know. But, you are a remarkable business owner. And then again, I think it sounded like, you know, choosing to have someone help you to make sure that you were able to find the combatable resources. So what was the moment and walk us through that moment that you determined that Confluent was the right fit for you?
Yeah. And and even say before, you know, talk about on Confluent because I will because Confluent rocks. I mean, did great job. You know, it's a matter of trying to make that decision, you know, because it's, you know, do we use, you know, a third person? We use a broker to help negotiate a deal because the first person even myself I mean and it's the elephant in the room we all need to you know acknowledge is you know it's a cost well if I use someone it's going to cost me but yes it is it may cost you dearly if you don't type of deal and I really from the owner standpoint again I mean I've created our systems really you know from scratch I've gone through you know a lot of the data I handle my books I have you know all their own algorithms and I really find that I know my operations extremely well and the finances well.
However, as you know, it's hard to work with your team. I don't know it as well as they know it at the level that it needs to be understood. You know that can be that can represent my company or anybody else's company at that national level because we all know that if you know any I don't care if you give your a bank information you know if there's something that doesn't make sense it creates doubt and uncertainty if it's not clean they automatically have doubt and I didn't want to have any doubt that I was going to be represented well and I didn't want to create any doubt because that would impact my value or maybe lose me an opportunity So being very respectful of the daughter dollar being you know a very aware of hey you know the cost but it's is it's exchange just like the services we provide to patients is healthcare expensive yeah but is it valuable?
You bet you it is you know val people value. And so as I made that decision like you know what you know I know I'm going to need to reach out to make sure that if I want the best for my company I have to be pick the best people who can represent my company in a highly competitive industry and so I got you know compatibility culture very important. But you know being getting to know you just via some of your Friday moments your crucial moments.
Yeah, I like what I hear. I hear a lot of me in you. I hear, you know, the education. And then, you know, I reached out. We had some conversations. Very good. You know, because again, I want to be able to, you know, share a burger with somebody that I'm going to work with. And, you know, I felt that you heard me, you know, because you automatically set a date. You came out, shared a burger, visited. What are we looking for? And so, you know, beyond just a resource, was it compatible?
And I thought, I like Paul. That was really good. I really enjoyed it. We talked shopped very much at ease. And so it got us into now, let's start data sharing. And and so, you know, I had some other conversation with different people, but you know, honestly, and this is I mean, this is almost true to our industry. Well, I just felt like a number just another guy. It's like, you know, patient compliance. If you don't give that patient time, if you don't make them feel relevant, they'll go away.
And there's some people that Yeah, I just wanted to go away. So again, I wanted that compatibility and then of course next the expertise because I know my I think my business well. However, u when I started talking to some of you know your team, well, they know it excessively well and then they can give me first-person information on how I compare to, you know, like similar companies. Where are we strong nationally? Where are we weak nationally? And that's a weakness question is something that I always pose.
So, hey Tom, hey Joe, where do I stink? Tell me where my company is weak because that to me is opportunity. So again I default to me as a practitioner you know we identify objectify everything as a practitioner but our but a successful treatment plan is really predicated on the weakness on the deficit because if we identify that get that patient on board let me tell you they do so well often so quickly because they identify and work on the deficit. Sometimes business owners or even practitioners we polarize the deficit because we take it personal.
No. To me upside is all about the deficit. So you know with your team through this process like tell me where I stink, tell me where I can do better and at the same time if I'm doing better in your eye if I'm doing good in an area tell me why that is so I can throw you know a bolster underneath it underneath it. I want to support the strength but I definitely have to work hard on the weaknesses. So we just perpetually narrow the margins.
So again, compatible resources, the same default answer, but you know, you sold yourself to me as an individual and then the resources were behind it made me want to dig deeper into your organization and you teed that up in a very, you know, easy fast fashion because to me interest is speed. If someone's disinterested, there's no speed. Yeah. And and Darren, you know, I will tell you that you have a marquee business. You're a marquee business owner and you are a marquee client as well. Consistently having constantly I should say with that curiosity, how can I be better?
Like you said, tell me where I stink. I'm not sure you stink really anywhere, but yes, we were able to dig in and show you some areas that, you know, we could, you know, present better. And you know it makes me feel really good that you feel great about the process we went through and the result. So now what I want to know is you know guys like you you're always thinking in the future. You now have the compatible resources alongside of you. What's your vision for the future?
So continue growth for sure. So our ability to grow now, you know, is not going to be as slow or as arduous, if you will. So I call it I say that we've grown organically, you know, I earn a dollar and I save a nickel. I earn a dollar and I save another nickel. And so you really have to strategically stage your growth just because it is it's, you know, economics. So we really created our company from you know the you know science-based components it's exercise physiology and it's accounting very factual components and so you know we had to use acquisitions and startups but again it was you know it was slower just because it's yeah it's a first person you know support system but now with you know someone like you know with confluent we have the resources unweights us and so I think our growth you know if I double triple be able do that.
I see that without a doubt. Without a doubt. We've done a number of, you know, acquisition. We've done like nine acquisitions over our time independently handled and done. But, you know, those that's a that's could be a heavy lift. But, but that lift, all that data digging, the due diligence, getting the payables and handling vendors, all that goes away. Now, I get to go find a compatible organization that we can help them grow alongside us. Very much like this strategic partnership and our new partner Confluent.
Now they get to handle all that heavy lifting stuff and they have experts in that and it gives me enormous peace of mind and satisfaction to know that I don't have to do that anymore. What what I get to do is step in and help facilitate the systems that we know that we get to put in our own peak physical therapy systems and facilitate you know my team to their team first person. So, it's going to really honestly accelerate the game. And so, with, you know, this process and we are new to Confluence team the as a first of the year, you know, but we started up a new clinic two weeks ago, you know, that was in the works prior to and then we're looking at submitting an LOI on another one to hopefully, you know, kick off not, you know, too long down the road.
But now we get to just focus on you know doing great works that are you know wellreceived and acknowledged so that just leads to instore growth local growth but also look for external opportunities if that is a startup or that is an acquisition so it frees us to do what we really find exciting what we love and that's the art of PT and as you know business owner I love to expand you know because that's gratifying and again as just as a thinking about my own individual team, you know, more is always more.
I want to be able to provide more to my staff. New staff or staff that's been around for 20 years, you know, so, you know, I find that I am where I am or we are where we are because of all their excellent work. And so, we have to grow just so that we continue to provide more opportunity for existing staff. We can hire more people, stimulate the economy, we can get into different territories and provide just more healthcare resources. And confluent these strategic partnerships which I may give pause to now it lights the fuse if you can find that compatibility and the resources all it's going to do is set you free and that's you know the day that we signed and I say we made it now we did it now cut me free let's play the game together with people who are as excited about the industry as much as we are and that stuff that you know, I got from you, from, you know, your team, Joe and Tom, and that I get from every Confluent employee that I've spoke to so far.
They love what they do, and all they want to do is help. Yeah, it's really cool. You you see this road and that road when you were completely independent had stop signs and a car broken down on the side that you had to go around and you had to, you know, maybe a police car pulling you over at some point, you know. Oh, yeah. And it's all these stuff and now I feel like you see this road to where you really want to get as a very clear path because some of those you know arduous processes of like you said going through due diligence on a potential acquisition writing the LOIs going through all that you can keep operating and driving that business choose the right partners out there now for you to roll up for you and really talk about value creation I can't wait to see where you get to in the next three to five years.
I think you're going to break some confluent records. I really do. [snorts] Well, I'm excited. I mean, every day is like, "Oh my gosh, I talked to, you know, we have team meetings on a regular." And the nice thing you get a group of people who resonate at the same level. Your energy levels are about the same, you know, because they're all about helping and helping one another back and forth. And it just fires you up. You know, I've been able to be around, you know, a bunch a bunch of other CEOs and now we're collaborating, you know, back and forth and from recruiting on an efficiencies and, you know, staffing component.
So now we have a huge think tank and that energy, man, let me tell you, it just keeps it just builds upon itself. And so it just, you know, increase your desire to want to grow. And again, it's a very liberating piece because now I don't have to do all the work that is necessary. I just get to do because now they'll do that stuff which is excessively important. Sure. We do the fun things. Absolutely. Absolutely. Well, Darren, what you're going to add to that think tank, I'm going to tell you, is going to be exceptional.
And I'm sure they are going to benefit as much as you are going to benefit from being in that think tank. Darren, you have, you know, been great to work with. I really appreciate you get getting on with us today and sharing this information with our audience and I want to thank you for your participation and I hope to talk to you in the very near future. Yeah. Hey, my pleasure. In any way I can help anybody for sure. And I really encourage even you know you know the business owners out there that are on the fence or know for a fact that they're not ready yet that's totally okay.
But I would say you know start positioning to be ready. You know reach out and start to position yourself to you know be acquired because every single practice owner I don't care what industry we are in we build it to sell it. I mean because it is an investment. So I would say definitely, you know, reach out and heck yeah. I mean, I'm an advocate for you guys. Reach out to Martin Healthcare and get some you get your data assessed and find out yeah what your time frame looks like, you know, where you're strong and where you're weak and because I can say your the work that you did for me was, you know, stellar and I call it a grand slam and your guys' work ethic phenomenal.
And you know, I come from a family of farmers and loggers, bluecollar work ethic, and I don't give work praise lightly, you know, and let me tell you, your team, I'd get 2 ams, and we're exchanging stuff at 11 o'clock at night, and I'm thinking, "Holy crap, these guys might outwork me." And that made me feel a little bit like, I better buck up. I better work harder. And then you know the data the portfolio that you guys created on the company really super good again I've done acquisitions and some of the sellers that I've worked with had brokers which means that I get access to their portfolios you know their sim packets and let me tell you you're really good I mean the information that I wanted as a buyer Yeah because sometime you get a packet of information like that thick I don't need to read all that I'm looking for some key data and sometimes that data I mean I you get a lot of you know frosting you know in some of those packs like irrelevant sometimes I can't find what I'm truly looking for and your guys's read very clean presented very well I don't know it was good it's the best I've seen I told you know Tom and Joe I said excellent I mean that reads really super well because I read my you know sim that you guys created as a seller would you know Sorry.
Gota. Yeah. Know if I want to buy, what am I looking for? And does it stand off the page? And is it consistent? Do I look do I see that financial or numeric consistency through the entire document? And if I eliminate the frosting, what am I left with? So I mean all that was topnotch. And you know it's a grand slam. I mean for me and my family, grand slam. Me and my company. You bet you a lot of forward moving opportunities for everybody in my company.
Grand slam, you know, the partnership that I created, you know, as far as chose with Confluent, honestly, I don't think I could have done any better. And then representation aces. So, you know, I don't look, you know, I look back on the whole process and I have zero regret, you know, because I don't think I can say that as a business owner at times. So he's like, "Oh my god, I so regret that decision or that experience was so horrible." But you know, this has been, you know, awesome from day one to today.
Well, and you have been awesome as well. And I thank you for your time today. And for any of you out there that have any questions on anything that I discussed with Darren today, just click below. Let's talk. Thank you very much for joining us today, and I look forward to talking to all of you in the very near future. And Darren, thank you again. Yep. You're welcome. Thank you very much.
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