Acquirers Often Reflect the Personalities of Their Leaders
Join Paul as he interviews Renee Halfhill, CEO of 15 clinic Main Street Physical Therapy. This interview clearly illustrates how the biggest thing that differentiates each up and coming acquirer from the others is the personality and beliefs of the leader.
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 I am so excited to have with us Renee Halfill. Renee is a physical therapist. She is the CEO of Main Street Therapy Partners. Main Street Therapy Partners is a privately held physical therapy company that is based in Canfield, Ohio. I have known Renee for many years. Main Street has 15 clinics in four states. And Renee, it is great to have you with us today. I am very excited to be here as well, Paul.
You and I go way back and I'm excited to be a part of what you're doing not only for Main Street but for physical therapy as an industry as a whole. So thank you. Thank you so much. Thank you so much. So let's start. Okay. Main Street 15 clinics, four states. A lot of growth happening. How do you guys differentiate yourself from some of the other acquirers in the current industry? Well, as you mentioned, I am a PT. So it's PT owned and PT run for that matter.
We are privately held. There is no private equity money involved. And we really work to create an environment where culture leads us and not necessarily financial metrics. And when we're working with potential partners, we like to make sure that our cultures are a good fit before anything else. And you know, fortunately or unfortunately, we have walked away from some clinics just because we didn't feel like the fit was right for us or we didn't feel like the fit was right for them. So, we really do try and handpick and curate our partnerships with our other teams.
Yeah. And you know culture today seems to have brought on a whole another level of importance based on the diff the difficulty that everybody's having attracting staff retaining staff so yeah that culture match is so vitally important you know Renee as a seller that would sell my business to Main Street Therapy partners what are some of the unique benefits that a seller might experience well I think one of the the biggest things in early communication is that I am a PT and I also had a therapy company that was in the sniff space that I just partnered and sold to another company and that was an incredible experience, one that was very positive for both me and the and my team.
And so I'm really able to empathize in those early days of what it feels like to kind of sit down and start to have those conversations. And then from there, what we try and do is have a member of our team that specializes in all the back office support. So, HR, recruiting, finance, clinical education, our op our ops leader, and quarterback each one of those areas with the potential company and who that person might be inside their company and really talk through the experience from top to bottom to give them a level of comfort and ease as they move into making this decision, which, you know, quite frankly, is one of the biggest decisions of their lives.
Yeah, absolutely. And you know, for our audience today, you know, it's so critical that when you sell your company, especially if you're staying on with the acquirer, that some of those day-to-day responsibilities that so many rehabilitation business owners just don't like to dive into can be taken away and they can really kind of enjoy. You know, let's call it maybe that last third of their career where they're going to be able to have a lot of that stuff taken care of where they can focus on driving new patients on the clinical aspects of their business and driving their performance.
So yeah, that's awesome. That's awesome. So if you're looking at an acquisition, what are some of the specific qualities obviously that you are looking for in a physical therapy practice? Looking at whether it's clinical, operational, and financial aspects of the business. First, we're looking at, you know, the people. We're looking at great people with great brands in sometimes very small communities that are just well recognized in that community. We typically always leave the brand as it is with the owner's if it's the owner's name or if it's the little town's name or whatever it is that they're calling that, we leave the brand the same and we also try and leave that same culture of that brand alone.
So we're looking for that first and foremost. It is critically important too that the owner understands their own metrics, their own key performance metrics that I know, Paul, you really work with that owner and try and get them to where they need to be prior to even going to market. And that of course is critically important because I get it. I'm a PT and I often say like PTs don't do math and you know we need somebody else to lean on. But when you're going to sell your business, you do need to become wicked smart on your key performance metrics and how they affect the business and where you need to bring it before you start to entertain any sellers.
So, those are really the most important factors for us, whether or not the owner staying on and if not, is there someone who internally would be a great fit for a leader? And if not then what kind of leadership team do we need to create inside that environment to have success there or continued success there? Yeah, absolutely. You know in many situations owners who are inside their business day in and day out you would think they would know their business. But it actually makes sense that they really don't know their business because they're not spending time looking at their financials.
They're not spending time looking at their operations be because they're treating patients, they're managing staff, they're doing all those other ancillary things that are, you know, on the forefront of every single day. And yes, when they finally are ready to take that business into the market and talk to folks like yourself, they really need to know that business for sure. Mhm. Exactly. So Renee, what are you seeing right now? And gosh, we're having so many conversations, but what are some of the key challenges that are being faced by small private physical therapy companies and how might these challenges impact their attractiveness for an acquisition by your company?
Well, I you know, my hats off to the small independent owners to be in this environment right now because, you know, it's always been the classic reimbursement issues that have plagued our industry forever. But on top of that, now we have like wage pressure, we have retention issues, we have recruiting issues, and it's all incredibly impactful for you know, for all of us, not just the smaller local owners. But I would say if we could come into, you know, an opportunity where, you know, the owners are struggling to recruit or they're struggling to retain and they can't, you know, kind of face some of the wage pressures.
This is really a sweet spot for us to be able to bring that level of, I guess, sophistication to that small owner. And it's usually just a huge sigh of relief. From them to be able to relax, provide the care that they know they can provide, but not have to be up at night worrying about you know, what am I going to do if that PTA decides to leave the company? Yeah, I think that is the biggest fear for everybody today. And you know, even bigger companies, even larger companies, nobody really loves recruiting.
It's a very arduous, difficult job. And so to have some of that taken off of their plate is just a huge benefit. What advice would you give small to midsize physical therapy companies that are looking to increase their value in preparation for a potential partnership with Main Street therapy partners? Part of the advice I would give is to really dive into your key performance metrics and look at them like an outsider would. Not with, well, I know Susie was on vacation that month and I, you know, was out for a couple weeks, but really look at them with a discerning eye from like another perspective and then zero in on those areas that perhaps could be stronger and need to be stronger and take the time to make that happen within your clinic or your clinics before you put those numbers out there.
We've had a lot of discussions with potent, you know, potential opportunities and we'll sit down and really get in the weeds with them and then they're like, "Well, we're going to step back a minute and sit on this for like six or seven months." And that's, you know, that's challenging for us and I think it's challenging for them, too. So, I would say get your game to where you want to be able to take it onto the court and then go, you know, full press and try and, you know, create a partnership that you feel really good about and that you can, you know, say, "All right, this was 20 years of my life, 30 years of my life, and I feel really good about the decision I've made." Sure.
You know, and that seems to happen differently with every practice. And I find that and I'm sure you see this as well. Some of those owners that act can actually see through the acquisition to the other side of that acquis acquisition that it's okay to achieve some of that growth with a partner where you're going to have some of those tasks taken away from you. Still getting there. But with that vision that seems to make companies much more attractive to a company like Main Street for sure.
Right. So economic conditions, everybody's talking about it. How has it impacted your acquisition strategy and what are some of the challenges or potential opportunities this environment may present to you as an acquirer? I think it has both positive and negative impacts upon us. Because we are not private equity and we're not you know you know reaching out for funds some of the interest rate impact has not had such an effect on us where I'm seeing some of those deals kind of simmer and slow a little bit because of that.
So it does give us an opportunity where we may not have had some to step into the arena. And in and in other ways, we're seeing both sides, sort of step back a little bit and maybe wait this out. I'm not really sure waiting it out is probably the best advice because I'm thinking it may even get a little tougher coming down the pike, but that's okay, too. We're really excited about the opportunities right now because it gives us an opportunity to be creative and if the potential seller is willing to look at it.
I know, you know, most sellers go into it as like as much cash as we can get. We we wanted we want that to happen. And believe me, I totally understand that. But in the current environment of where to put your money once you have it and it being so volatile, it gives us the opportunity to get creative with maybe some seller notes, some earnout, and then some, you know, bump ups on the earnout as you spoke. I mean there's ways we can do these deals.
The environment is forcing us to do it that in the in the end will actually become more attractive. And to your point earlier, Paul, if the owner has the vision to see, okay, you know what, I'm going to actually end up in a better place. It just may take me another year or two, three to get there. So that's exciting for us to be able to offer those and I think it brings a lot of satisfaction to the owners who have who we have partnered with in those ways.
Yeah, we agree with you. You know in this current you know economic period you know we also would advocate that waiting probably doesn't make sense unless obviously you know there's huge lift opportunities in the very near future for your own business internally. But this is probably going to get a little worse before it starts getting better. And at least that's what we're seeing. You know, I don't think it's ever going to come back to like what we saw in 2008. And a lot of the prognators are saying that, you know, they're we're not going to see that.
But, this is probably not a time to wait and see what happens. If you have an opportunity and this is why we're doing this series. There are now new acquirers like Renee and Main Street that are actually being very aggressive right now in terms of looking at opportunities and trying to you know kind of go a little under the radar but build and grow, you know, efficiently, right? You know, you may have answered this in some respects, but as we look forward now, do you see that based on 2023 24 that your strategies specifically in terms of multiples, pricing, structures, do you think that will change as we move forward?
I don't you know because we aren't private equity-backed we've always had to rely on sort of a creative formula and that is sort one of the positives about Main Street is we can offer a deal in the way that suits you best and not necessarily one that our investors need us to present. So, so that has always been our mantra, but I think it gives us an additional leg up right now to do that. We we are also looking at, you know, when the environment felt you know, like it was moving so rapidly, we were really just focusing on acquisition growth and now we've taken a step back and said, you know what, we will do some denovos here in the future.
We haven't done a denovo since our original clinic. So that's kind of exciting too to be able to go back to some grassroots openings and things like that. But we will still we are still going to continue to be as aggressive as we have been looking for potential partners who are a great fit for us and a great fit for their team as well. Yeah. So you guys are full steam ahead and yes given that you're now in a number of states you know to build around that yes I would agree a denovo strategy could make sense but obviously you know you've done a number of successful acquisitions now it's now it's growing out in each one of those states.
Exactly. What would you tell me in terms of the best example of a company that you know has made, you know, what you would consider a real success. They've been a success from your side, from their side. You don't have to tell me the name, don't have to tell me any specific numbers, but give me a story of one of your acquisitions and how it kind of went and how it was successful. Well, I actually have two thoughts that immediately come into mind and two very different scenarios.
One where we had the owner leave. She was actually a non-PT and went on to for to another career which, you know, was really exciting for her. And so we went in, you know, and worked with her current staff. And we were able to elevate one of her directors to like an area director and she has just become, you know, like such a support for our team and our team to her. In fact, she sent our recruiter flowers this week because she was so happy with some of the work we had been doing for them.
And then we had another scenario where the owner stayed on for several years and it was equally as rewarding of an experience both sides. Now, let me tell you though, Paul, I don't even know if it's possible. None of this happens without a few bumps in the road. Okay? There is change and there is change that we see coming and then there is change that we don't. They and the new partnerships always teach us something. You know, multiple things that we sometimes will bring to some of our other clinics as best practices.
It's a two-way learning street. And we by no means are saying our way is the best way. And in fact, we leave we leave a lot of the way the clinics operating up to the clinics. We don't come in there and try and change schedules or formulas. If it's working, if it's not broken, we will not be fixing it. We don't have a golden rule for a 40inut schedule in every clinic we're in. We let the clinics do what is best for that particular clinic. And they all seem to have their own personalities.
Yeah. Yeah. No, and I really appreciate your transparency on that because no, there is not the perfect integration. There's not the perfect due diligence process. You know, as you said, there's always bumps in the road. I think, you know, the way we, you know, can best val evaluate acquirers when those bumps in the road occur, how do they manage it, how do they handle it, you know, with our clients as well as obviously for you with your prospects. That's I think the test and the measure of who are the great acquirers compared to who you know who are the good all the others right I would agree with that given these dynamics moving forward how are you guys positioning yourselves for the future in this market that's an interesting question I'm you know like to be on the innovation side and so we are really pushing the envelope to our employees, to our directors to ask them like what do you see as the future inside your clinics, inside you as an individual?
What gets you excited? And we are finding that some of our clinicians have some real passion and excitement around certain areas and certain programs that they'd like to begin doing. Like we did health tea health back in you know covid but we haven't done it since then and one of our employees you know said you know I think we should offer this is something hey it's like the gig economy right people want what they want where they want it so we started to offer it in some of our clinics and we're seeing it take off and it's really from the direction of our clinicians that we look to help steer the ship.
We're also looking at more cash programming as I think everyone has been doing for the past several years. And as we know, the insurance companies are not turning around saying, you know, we're going to pay PT more. They're always looking at ways to pay us less, unfortunately. So, we are always looking for other revenue streams as well. But our clinicians are very innovative and we're trying to harness that right now. Yeah. And what a testament to you guys as leaders that you are not kind of top down telling them we have these great innovative ideas here at the top.
We're driving them down to each and every clinic versus what you're doing it sounds like is asking for their feedback on what programs with their feet on the ground with the patients. What programs should we be investing in to stay at the forefront of this? I applaud you for that. Thank you. Yeah, it's been it's been interesting and exciting. I love it. I love this part of it. Yeah. Yeah. No, and that's, you know, talk about a dynamic culture. Certainly that's at the forefront of a dynamic culture.
Well, Renee, look, we have really enjoyed having you with us today and I'm sure you have given our listeners today a lot of valuable information. I really appreciate your time today. I so appreciate you having us, you know, Main Street on today and I'm willing to help in any way I can with any owners that might have questions or thoughts on it. And thank you again, Paul. It's it's been a pleasure and hope to see you again soon. Yeah. So, for all of you out there, you just heard it straight from Renee.
If you have questions about the conversation that I had with Renee today, click below, give us a call, and we can talk. And if you'd like to be in touch with Renee, we will put you directly in touch with Renee. Thanks for listening today and have a great day.
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