This Up and Coming Acquirer Puts Cultural Alignment High On Their List
This week Paul revisits his recent interview with Justin Novinger, COO and Peter Chung, CSO from Thrive Physical Therapy, and provides greater detail on the topic of cultural alignment. Watch this episode to learn what the advantages are of evaluating your cultural fit with potential acquirers.
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. I'm Paul Martin, founder and president of Martin Healthcare Advisors and I'm excited to talk to you today. So what I wanted to do today is a few weeks back we did an interview with a company called Thrive Physical Therapy and the two the CEO and chief operating officer Peter Chung and Justin Novinger. And in that discussion there were a lot of items that came out a lot of points that they made that we believe you could take as action steps.
So we're calling this episode opportunities for action. Again based on our discussion with Peter and Justin. So let's start with what we thought was one of the first opportunities for action and that is to be sure that you are evaluating the cultural fit with potential partners. This is something that we hold very dear to our hearts as one of our driving methodologies when we are looking at matching a company we're representing with potential acquiring companies. Thrive emphasized the importance of that cultural alignment with their partners.
In fact, they even brought up what they called the airport beer test as a metaphor for this alignment of cultures. Again, this basically means that they want to establish partnerships with people that they would absolutely enjoy spending time with even outside of a pro professional context. You know, in addition, we really want to evaluate partners for this cultural fit and it should not only be based on the business model, financial offering, but again on what's that cultural fit and again this could be involving the values, the mission, the woke culture of potential partners and also considering whether your business aligns with their business and vice versa.
And if you have a positive, vibrant culture, you are going to have a number of opportunities out there to align with other companies that are really driving positive cultures today. Another thing that Justin and Peter talked about was preserving brand and clinical autonomy. Thrive really stressed the importance of maintaining the unique brand. So they keep the name of the business in the markets where they acquire businesses and the clinical autonomy of the businesses that they acquire. So they don't change clinical processes of the business they acquired.
They provide support to help the practice get to that next level, but they described it as not imposing a topdown approach. So my question for you is what is the value of your brand in your community and enhancing your brand by getting out in the community will absolutely make you more valuable especially for companies like Thrive that are going to keep that local branding. You know, when a large company acquires a smaller company and the smaller company maintains that brand and has a strong brand in the community, we call that keeping home court advantage and that can make you very dangerous to other competitors in and around your market.
You now have unlimited cap unlimited capital and in addition you have a brand that has been in that community for a long time that people are very used to and comfortable with. In addition though be open-minded because there are many different advantages to keeping your brand obviously as we just described but in some cases there could be advantages of utilizing a regional or national brand. I will tell you in my own acquisition of my business with two partners way back in 1996. We were acquired by NovaCare.
The name of our business was physical therapy and sports services. I loved that name. But in the market that we were in, NovaCare really had a very strong powerful name. And when we made that change, our business did not drop even a little bit. So be open-minded about that. That as well. All right. Next, it's how do we increase business knowledge and availability of accurate data? That was one of the things that Justin talked about clearly, which was, you know, do owners really truly know their business and do they have good available data?
Business owners should have comp a comprehensive understanding of their business. You know that may sound basic but it's truly understandable. When you are working inside your business every single day in many cases you may not have that comprehensive understanding of your business. You're buried every day. This is not only going to help if you kind of taking a step back and taking a look and really understanding all the elements of your business operational financial clinical referral generation. This will not only help you in managing the business but also in communicating effectively with potential acquirers.
Again, is your data readily available? Here's the test I put on this. If you're routinely looking at your data and utilizing your data, it's going to probably be readily available today. Seek a professional that will look at your data through the eyes of the acquirer acquirers before you share that data with the acquirers. Okay? And Peter made this point that again sometimes they get data and it just doesn't make sense. So, it's really important that you have your data viewed and viewed as the acquirers would look at your data and pass judgment on your data.
In addition, it's a great time if you're considering within the next few years to potentially take your business into the market. Conduct a comprehensive review of your business. This includes the financial health of your business, employee satisfaction, customer feedback, your position in the market against the acquirers and other competitors. Work on any weaknesses identifying that you identify during this assessment. And then document the process that you make. Keep records on the process you make from when you did that assessment. This is going to help in presenting a very clear picture to potential acquirers on the growth that you've achieved and that this growth was actually planned.
We do all of this in something that we call our outside in assessment that incorporates all of the analysis, the assessment as well as the action plan that you will be required in order to take advantage of what those levers are that you can pull to drive your business forward. Now, this was another thing we talked about in this interview, which is a focus on your core business and sustainable growth. Look, rather than chasing temporary revenue increases, we really advocate that business owners should focus on their core business and work on consistent growth over time.
I say all rehab all the time. Now, that's not to say that you cannot bring in programs that could potentially drive more rehab referrals, but try to stay within the context of rehab. I know there's a big push right now in wellness and fitness, and I think it is a perfect match. Hypothetically, it's the perfect match with a physical therapy business. But I will say when that wellness and wellness and fitness business consumes more of your time than your physical therapy business, you are going to find that the margins on some of those alternative business models that you bring in are not anywhere close to what you can do.
So let's look at what are there things that you can add that have to do with your core business of physical therapy. In addition, in addition, a very much of a focus on people, the employees, their engagement, driving staff performance that is me measured and monitored will be very rewarding to your staff. We don't need to be apprehensive about expecting our staff to perform at high levels. Clinical performance, operations performance, and all that will drive your financial performance. Be open and candid about these things and transparent about these things, and your staff will more readily accept them and look at creating a strategic plan.
These plans do not have to be like the old-fashioned business plans that we created that some many of us created many years ago. These are very shortterm one-year plans where literally if we analyze the business identify what are the core strengths and weaknesses as well as what today are some of the selling points on your business. Then we can create a strategic plan to corre create correct those weaknesses, drive those strengths and especially shine up those selling points. We can help you do this and again this can also be done in and around the process of engaging your employees and your staff to come with you on achieving what we you know the growth and the development on these plans.
So again, you know, Justin and Peter were very diligent in describing to you that there is truly a solid market out there. So today is the best day to get started on improving your business performance and preparing for that market. If you would like to get started on that today, click below. Let's talk. I look forward to talking to you in the very near future.
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