Choosing the Right Partner Matters More Than the Price

They have also gone solidly in the Midwest and have a great presence in the Southeast. Their headquarters in White Plains, New York. So, Bill, you ready to go? Absolutely. And I will second what you just said. It may everything you just said makes a huge difference. I am a PP by trade. Was in private practice majority of my first half of my career. Sold a number of my own practices and it does make a huge difference in making the right choice of who your partner is depending on whether you put your head in the pillow at the end of the night and be happy for your team and for your teammates or if you sort of regret it a little bit.

Regardless of how much money you have in the bank afterwards. So, absolutely. Absolutely. Yeah. No, and I'm excited to hear you know, some of the things about Ivy that as we know are very unique. So, what is the most common reason that former owners will choose to join Ivy even if they may have had two or three other similar offers on the table? I'm going to make an assumption, but I think that I think really the The main reasons would probably be our teammates, the people who work here, the dedication to not just Ivy but the field of physical therapy.

So, a little bit of the culture. I think the other one is the probability of success and the probability that you're going to be happy post. You know, we're approaching I'm approaching 80 deals with Ivy so far and 90 plus percent of those sellers are still with Ivy over a decade. Probably my staff that I'm most proud of. That shows that people are finding value. So I think it's the probability of that success. And they mentioned our size. You know, we're the first organization that I'm aware of in the last 30 some years have gotten to this size without having a crash or an issue with stability.

So I think that's probably a big driver is what does this look like over the course of the next three, five, 10 years. Yeah. Yeah. No, it's incredible. And we've watched you from all the way back to the very beginning. All the way back to Star Physical Therapy right there in New Jersey. Yeah. Tommy. So what's this company? Ivy. So what do your partners come to appreciate about Ivy after they have really gotten to know Ivy and your business? I'd say it's culture and the dedication to the field, dedication to clinical excellence, dedication to a real great patient experience, community experience, referral source experience.

It's different. I've been doing this a long time. It's my 27th year as a physical therapist and, you know, I've been in the field for about 30. There's something palpable about our culture. We just came off of a our director summit about a week and a half ago and it was pretty awesome. And there was a little over a thousand people teammates from Ivy there at the time. It was a little overwhelming from our first one at 26 locations only about 30 or so. But we did bring a bunch of prospective CU partners there and those prospective partners all came away saying the same thing.

This is the culture here is different. People hear culture a lot and you know I I've been exposed to your culture and I've talked to many of our former owners. Expand on that a little bit more. If somebody said you know describe the culture at Ivy, how would you describe that? There's a few things out of our values I think that ring true. You know do the right thing is a big one. The bigger you get sometimes you don't have to do that. We stay true to that.

Love what you do. That's a big one, right? If you if you don't love physical therapy, if you don't love treating people, if you don't love making a difference in your communities, you're going to struggle here a little bit, right? Getting stuff done, getting the right stuff done. So, being thoughtful about the things you're doing and probably and serving others, making sure that there's more to this than numbers and dollars and cents at the end of the day, that we're really making a huge impact on a lot of people's lives.

Those are things that aren't buzzwords, you know. Our original tagline, the gentleman we were just talking about with Michael Lucell, it's all about the people. That's kind of where we started. And that has never changed since day one. Yeah. Yeah. I remember him telling us that long time ago. Long time ago. The DNA is there. So, when your partners come to appreciate Ivy after or what do your partners come to appreciate about Ivy kind of after they have gotten to know Ivy? I think it's primarily the infrastructure.

So from a partnership perspective, what am I actually getting out of this from a support services perspective? I think they appreciate that. I think they also appreciate the level and the quality of those services that they're getting. There is a difference between offering, you know, talent acquisition, HR, model, sales, marketing, KPI, kind of playing out all the things that are behind and so forth. There's a difference between, you know, one brand of a car and another brand of a car and we have really high quality people all the way throughout.

So what it does is it creates capacity. And I think if you wanted to translate it to what does all that mean to me? It means you can trust. It means you can trust your teammates. It means you can, you know, focus on what's important to you. You know, if that guard's going to pull, that guard's going to pull and you can, you can feel comfortable running through that hole. So that creates capacity for people to focus on the things that are most important to them and their teammates.

Absolutely. So if a partner took the same business and ran it through three different acquirers, where would your model produce somewhat of a more meaningful different outcome looking out three, five, seven, nine, 11 years later? I would say it's probably two things. One is retention of your team. I think over the years what we have seen is three, four, five years after a transaction, it's a pretty different organization and people aren't there. That's not been our experience. We have a high level of retention. And I think the next is just the ability to grow and get a good financial return on your business.

We're not shy about it also being a business. And most of our partners aren't shy about it also being a business. So when you look back over the 80ome transactions, our average, you know, growth on that is about two and a half times. That's pretty significant. And that's regardless of the size. You can be coming in with 10 or you can be coming in with one. But that that's some pretty strong growth overall. So when I talk about the infrastructure and capacity to do things, the ability for you to grow, it it's proven out in the numbers.

Yeah. Yeah. So, what is something that Ivy offers to your partners that most of the other, this is where I'm finally digging into what do you guys do that the others don't do that, but that most other acquirers can't truly offer? I would say some of it is transparency. The way I've seen structures sent up over the years creates a lack of transparency. If you want to translate that into something it's you it's a level of motivation right definition of motivation is motive or reasonation take action.

So what is your reason to take action in the morning? What's the reason to take action the day after? A lot of people lose sight of what that is and they can't put their number on. They say well I don't I don't know what this means. I don't know if I do this tomorrow what that's going to mean to me or my teammates. So our overall structure not to go into the details of it I think does create that motivation which has created that stickiness in our in our partnership overall.

And I guess the other piece is again sort of that dedication to great service for all the infrastructure bringing the table. I think non-transparency is one of the biggest fears that we see. You know it's been three months I have not seen our financials. I don't have control of it anymore. Yeah. So yeah, I think yeah, I think that's key. Really, really important. You can go to bed in our infrastructure at the end of the night and say, "What is it that I can do tomorrow to have an impact?" And you'll have the answer to that question.

Yeah. That's relatively rare, I think, in our field. Sometimes to the point you just made, sometimes you know more about a blue chip stock that you just spot in the newspaper than you do about the organization that you're in. It's not just not the case here at our organization. Treat our partners like partners. Yeah. Absolutely. Absolutely. So, what type of situations that are out there that I'm sure you guys see that you would intentionally avoid even though it it's going to cost you a deal? Stability, continuity of culture, continuity of staff, continuity of referral sources, stability within a market, or potentially somebody selling for sort of the wrong reasons.

So, kind of go back to like, you know, maybe a lack of a secession plan or if you're looking to say, "Hey, I just want to I don't want to be part of something. I just want your money or I just want somebody that's going to take over my revenue cycle management, but I don't want to be part of this. I don't want to be that's never going to work." so those are sort of red flags that we say, look at this is not selling your business.

It is a change of identity and that's what it really is at the end of the day. So if you're not ready for that change of identity, you're probably not gonna end up being in the farm. It' be a bad experience. Yeah. The hypocratic parties do terminate, right? Absolutely. Absolutely. Bill, is there a time frame that you guys would typically at least with initial conversations with a potential seller that you'd be looking for, you know, for business owners to stay, you know, with Ivy or to stay with their local brand?

Is there a typical number of years? Listen, it's not intentioned servitude, but we can't tie you here, but I would love for you to be here as long as you possibly can be and as long as you want to be. If there was a secession plan, I know it was a transition where somebody was going to be exiting. We would need, you know, I would love to have at least six months to a year. More than a year would be much more ideal. So you know, if you're going to be putting your time in, but I have done we one of the first deals I did here at Ivy, which is almost 12 years ago, we signed a sixmonth employment agreement with that seller because he said he was in that was 12 years ago and he's still here today.

So I would I would rather that be the outcome than not. But yeah, typically a transition is going to take, but you get through everything. Sure. Sure. Yeah. So, what is one promise sellers commonly hear from acquirers in this market that is in fact, as you lack at it, fundamentally unrealistic, kind of once the deal closes, nothing's going to change. That's the one thing you hear. If anybody ever says to you, "Nothing's gonna change, Ed." Because it's definitely it's going to change regardless of whether you do a deal or not.

Life happens. Things change every day. So, it's one of those things where it's like, hey, you're going to have total autonomy. No, you're part of a team now, right? This is it's not an individual sport anymore. You're part of a team. So, that that's probably the one thing that I hear from people. They told me nothing's going to change. Yeah. If you woke up six months after a transaction, you said, "Bill, you never said this. I didn't expect this." Like, shame on me. That's not the way we want it to be.

And we're very honest about what things will change and what things won't change. That doesn't mean everything is going to change, but you know, changes has variations, right? Some are bigger, some are little. It's one of the first things that we talk about with a potential client is that, you know, your team needs to be ready for change. Obviously there's all different levels of that change, but yeah, very similar to the way we talk to our clients. So, if you take away valuation and structure, what are some of the operational or leadership capabilities that would make an owner say, you know what, this group actually makes my business better?

I would say it's primarily our I mean everybody offers continuing education whether it's internal external online those types of of avenues professional development is a huge piece and then also just having the trust. So having the ability to take a great therapist and make them a great clinic director, right? Taking the time to make our teammates educated enough and good enough and confident enough that they don't necessarily need to be here anymore and they can leave and open up their own place, but they choose to stay because they want to be here.

We put an enormous amount of effort into professional development. I've had we do a lot of internal classes and I've had a lot of people say to me after I'm not just a better businessman, I'm a better father, I'm a better brother, I'm a better person because of it. And I haven't seen that kind of dedication to people in a lot of other organizations and we take that very seriously. Yeah. No, great point. Great point. So if you look back to your successful partnerships, some of your most successful partnerships, what did those owners do, former owners do that made them so successful with Ivy?

Attitude. Came in with the right attitude. So, I talked to a lot of people about this because you're going through the transition and I've been on both sides of the fence and it kind of goes to this I like to use the analogy of the difference between now nostalgia and legacy. If you're coming in with a nostalgia mentality, this is the way it used to be. Corporate wants us to do this. I doing this versus, you know, and it's enough for them that it's going to fall apart at some point.

If you're coming in with a legacy mentality to say, I have gotten new information, something I didn't know before and that's changed the way I've made my decision and I'm going to lead from that standpoint. So when you're driving by and it's 20 years from now and you say the 10,000 people that are getting taken care of in that clinic is because I opened that clinic and because I built that team and because I was here, that's a legacy mentality. You come in with that legacy mentality and say I'm willing to be part of the team.

I'm willing to accept some new information. I'm willing to adjust the decisions I'm going to make. Those people have gone from four locations to 70 locations. That's not an exaggeration. That's a real number of how people have grown. People who have the nostalgic mentality, it's not a magic bullet just because you've partnered with us or partnered with anybody. Like there's a huge part of the legacy owner being part of that growth. And if you're not ready for that, you're not contributing to it, you're just not going to get that.

And you create a self-fulfilling prophecy and saying, "Well, it didn't happen because of them." I I'll say even my own self personally, when I did a handful of my deals, I look back and the 28-year-old Bill said it was all their fault. The 50y old Bill said, "Boy, maybe I may have approached it a little bit differently." I think it's the attitude you come at it with is going to be danger. Many years ago, I had an uncle who passed away many years ago. But he was my favorite uncle.

Absolutely. For sure. And he knew I was getting in this business. And he said to me, he said, "You know, I owned a printing business. I'm sorry. I had a printing business. I worked for a printing business and the printing business got acquired and all the owners did on a daily basis was complain about the new owners and that everything was their fault and the whole thing just fell apart. So tell your former owners, do not just complain about that acquirer all day long because you're they're going to follow you right into that.

So we use that a lot 100%. It's a it's a complex equivalent that people believe is true but not necessarily. I.e. If the owner who's been spending maybe a year with you trusts us and your team trusts you, well then therefore that team is going to trust us immediately. I that's just not the way human nature works. That has to be built and that trust has to be built mutually across and having that change management person that says can you just be open-minded to the conversation makes a huge difference for sure it's a culture that we push is a culture of change we just talked about change if you don't build a culture of change no matter like you said we don't change it you're going to eventually change it there's going to be change so great stuff well Bill this has been great and you have given our audience today an enormous amount of information.

So I really appreciate you coming on and yeah, I hope to get you on again. Appreciate you having me on. Always enjoy the conversations. Thanks, Paul. So, for any of you out there that have a question for myself or Bill, just click below. Let's talk and have a great rest of your day and a great weekend.