The Biggest Decisions You'll Need To Make In 2025
This week Paul explores the fast-approaching challenges facing our industry in the next year, and offers wisdom you can use to prepare yourself for growth.
Full transcript
Generated from the episode audio and lightly edited for readability.
Good morning. This is Paul Martin, founder and president of Martin Healthcare Advisors, and welcome to another episode of the Martin Rehab M&A Advisory. I want to thank all of you for joining me today. And believe it or not, we are heading into the final two months of 2024. I mean, Halloween is right around the corner and so we believe it's time to start thinking about decisions for 2025, especially based on all that is happening in the economic market. You will be making some big decisions for 2025.
Now, depending upon your size, if you're a rehab business owner with anywhere from, let's call it, seven clinics up to 200 clinics, we consider you to be middle market in the rehab industry. It may not be considered middle market in other industries. And if you talk to your investment banker or you talk to your accountant and you have 15 clinics, they may not consider you middle market, but we consider companies with seven clinics or more what we would call rehab middle market. And so right now, if you are in that zone, you're probably asking yourself, should I sell or partner with a larger company or should I grow on my own in 2025?
What I'm here to do for the next many weeks is to help you figure that out. And all this information is going to be very pertinent for smaller companies as well. Again, companies that are six clinics and less will get valuable information from all the things that we're going to share over the next two and a half to three months. So on this first topic, the topic of should you sell or partner with a larger company or grow on your own, as I said, over the next few months, I'm going to be taking a deep dive into that question and I'm going to be bringing what I would consider some very heavy hitters along with me.
I'm going to be interviewing some of the top CEOs from the biggest acquirers in the country and we're going to be asking them what are they looking for? What are they seeking most in 2025? And we're going to cover thoroughly with them what economic factors, you know, talking about interest rates, inflations, what that's going to be doing to multiples as well as deal structures, and only a couple weeks away here, less than a couple weeks away. What impact will the upcoming presidential election have on the rehab M&A market?
Will these companies be seeking middle market rehab businesses or will they be seeking smaller rehab businesses? And I think that's a question that we will definitely tackle as we talk to these CEOs. Now, let's talk on the grow side and how we're going to tackle again. Do you want to sell or partner with a large company or do you want to continue to grow on your own? If the decision becomes we want to grow on our own, we're going to be exploring really two options of growth and should you go the acquisition route or should you focus on starting new clinics, denovos as some of the big companies call them?
There are pros and cons to both. Both economically, you know, economically, financially, operationally, etc. And I'm going to break it all down for you from an operations and financial return on investment standpoint. You know, as a part of a developing a growth strategy, one of the key factors that everybody is talking about is staffing. When you acquire another company, you also get their staff, which could be a huge advantage given the current shortage of physical therapists to an acquisition over a new startup. On the other hand, as I just said, if you start a new clinic, you're going to need to find and hire new talent.
And if you do that efficiently and properly in this market, that can be a plus, but it's also a big challenge. So, we're going to address that challenge, and we're also going to take a real close look at how today's economic conditions are impacting these decisions. It's a lot to package, but we're going to lay it out for you so it helps guide your focus and clarity on what you're going to do and what you're going to become in 2025. Another topic that we want to talk about, and we talked a lot about this coming off of the private practice section conference, we want to do a number of shows on innovation.
Every day there's something new in this industry. It seems like, but the question is, what actually adds value to your business? And I've said this before, or what is just a shiny object with no real substance to driving value in your business. We're going to be sitting down and talking to the CEOs of some of the most innovative companies in our industry. They're going to be people that are pushing the boundaries of what is possible. But we're going to focus with them. Certainly give them a chance to lay out their product, but we're also going to be focusing on one key thing.
What makes sense for your business? So, this is not about chasing trends. It's not about chasing the next big thing or anything that has the letters A and I in it. We got to have. It's about understanding what helps get you to improve your bottom line and drive growth and value in your company. So, I promise you are going to want to stay very close to these videos each week as we are going to be giving you, I believe, just about all the information you need to make the right decisions about your rehabilitation business for 2025.
We're going to run this series right through November, right through December, and we're going to run it into January because I believe you're still making decisions for 2025 even as you get into early and mid January. And as I said earlier, whether you're looking to sell or partner to a larger company, looking to grow, looking to simply add staff and grow from within, I think we're going to give you an angle to help you get to the next level. Hey, thanks for watching today. Let's get ready for 2025 and make it your best year ever.
If you have any questions about this video or any of our others, click below and let's talk. Thanks for joining us today and have a great day and a great weekend.
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