When 6 Acquirers Say the Same Thing, You Should Pay Attention
Paul asks six acquirers which promise to sellers is unrealistic once a deal closes, and nearly all give the same answer: the claim that nothing will change after the transaction.
Full transcript
Generated from the episode audio and lightly edited for readability.
Good morning. This is Paul Martin from Martin Healthcare Advisors. Today is a very special episode. As you can probably tell from this intro, today we're doing something a little different. Over the past year, I've sat down with six different acquirers from six different companies with six different models for how they operate in the PT space. I asked them each the same question. What is a promise that owners hear that is just unrealistic in this market? As unique and varied as these acquirers are, they each gave a very similar answer.
As you watch this compilation, see if you can notice the similarities. Thank you all for watching. Have a wonderful weekend and I'll see you all in person next week. Absolutely. Absolutely. So what's one of the promises that partners, sellers will commonly hear in this market that is in fact fundamentally unrealistic once the deal would close. And I'm sure you have a lot of these conversations with potential sellers. I love our colleagues out in the marketplace that tell people that nothing's going to change. And usually when you're telling people nothing's going to change, everything's going to change.
Yeah. So we try to prepare our future partners to understand we have a very centric marketing plan and as you know in my marketplace we're very successful. We have a very centric human resources plan and we educate our partners that are joining us before they even sign on the dotted line to understand our human resources, how it operates, how it functions, how you're going to be able to get acquire new physical therapist and new teammates to the family. So, we try to make sure that we explain that.
Yes. On a clinical provision of care. We never tell a clinician, owner, partner how to treat patients. You've been successful for 10, 15, 20 years. That's why we're having this conversation. But our colleagues love to do the sales pitch and say nothing's going to change. I come right out of the gate and explain to them what's going to change is if you want to continue to treat patients, you're going to have more time to do that. That's definitely going to change. If you don't want to deal with human resources anymore, don't want to deal with operations, don't want to deal with landlords, don't want to deal with payroll, don't want to deal with banking, don't want to deal with marketing, that all changes.
Our colleagues love to say nothing's going to change and then all of a sudden, oh my god, what did I walk into? We try to prepare our future partners and teammates to understand on day one, this is what's going to happen. 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 going to change head for hills 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 the things where it's like, hey, you're gonna 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, "Billy, 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. Sure. 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, I can't wait to hear how you guys finish complete this one.
So, what's the one promise that sellers out there commonly hear in this market that is just in fact fundamentally unrealistic once the deal actually closes? Good question. Probably the knee-jerk answer that everybody would give you that is nothing is going to change, but I'm not going to give you that one. Oh boy. Yeah. Yeah. We're about three for three, Steve. Now, now we're only two for three on that. So, way to go. Way to go. Well, look, man. I and look, we we've had to learn this a little bit the hard way, right?
I think that a lot of founders hear or think that once they join a platform, and if they truly do want to grow, that growth will simply accelerate without requiring much investment. Okay. The reality is that building a larger health care organization or PT platform requires ongoing investment and it's investment in people it's investment in infrastructure leadership systems you name it. So as the platform grows like we mentioned Jason's platform there will be opportunities for the partner to continue investing alongside the business if they want to maintain their relative ownership and participate in the value being created.
Founders who approach a partnership with a long-term builder mindset tend to do really well with us because they view those opportunities those investment opportunities is as part of growing the enterprise that they really helped to create in the first place. Look, they've been investing in that business their entire career. Just because they took some of the financial chips off the table now didn't all of a sudden create an environment u that makes this business something they shouldn't continue investing in you know and in fact the business should be stronger and more investable with somebody like us than it was previously so I think that mindset of investment's over I got my money is probably the thing that's most unrealistic doesn't mean that a partner like us can't help find creative ways for them to invest or help to fund that investment.
But they do they should take that approach that they want to continue investing in their business that they created. All right. Can't wait to hear your answer here because I just for some reason think it's going to be unique. But is there one promise that sellers commonly hear in this market that is in fact fundamentally and absolutely unrealistic once the deal closes? Nothing's going to change. Real simple. And and I again I have to be very honest with you. In the beginning, I said that and then my operators and our HR people and everyone on our team that has to deal with the downstream consequences of that comment grabbed me by the neck.
It was awesome. It was great. So, that's the that's the biggest thing. Things are going to change, guys. Things are going to change. We have a history of changing them for the better. Now, we aren't perfect and we're going to need some grace for a year, but just trust us that we've got 30 of you beforehand that are better off. And so, I think that's the biggest thing we're giving them and then giving them some direction on where they're going to change. Hey guys, we got to flip the EMR.
Here's why. The back end gets way more efficient. We can tighten up a lot of the front end. We can save some money on the back end so that your p your therapists don't have to treat so much to keep the margins. And again, it goes right back to transparency and honesty. I don't want to in the beginning I really thought nothing was going to change and I was way wrong. So, we're very honest about what it's looks like and in the phases. We have a you know, you know, three set a three-step phase.
And so, again, being honest, okay, during the first 90 days, EMR is going to change. That's it. Nothing else is going to change. Second 90 days, this is going to change. Third 90 days, this is going to change. And then by the end of the year, you're we're all back on the same cadence. And here's the why. Here's the why. The why is that we can all talk the same language and we can hold each other accountable using the same numbers. I can't wait to hear your answer on this one.
We're two for three on the on the big answer, but what's one promise that sellers, former owners commonly hear in this market that is in fact fundamentally unrealistic once the deal closes? Yeah. So I think a common theme amongst a lot of groups on the market was is sort of this notion that nothing will change. You know I think in principle I think I understand where they're coming from with that. But I think in actuality there will be changes right? You know when it comes to call it payroll or some of the administrative burden of operating a business there are certain things that have to change in order for us to provide the best support possible.
And so I think this you know that's the common theme. U but we try to you know get ahead of that on the BD side for and working with Justin too is you know communicating what those changes are and how they benefit you in a partnership moving forward because you know without you know one without the other is sort of like okay this is just let's chalk it up to whatever change it is what they're going to do. But I think the narrative that, you know, my team tries to go out and ensure that we call it assuage our sellers on is realism along with the benefit of it.
Absolutely. And we've gotten a very similar response on this, so I'm anxious to hear how you're going to respond. Okay. What's that one promise that sellers commonly hear in the market that is in fact just fundamentally unrealistic once the deal closes? Nothing will change, you know. And and the irony is and we go out of our way to tell people, "Please don't tell your staff nothing will change." It's like getting married and saying, "Okay, we're we just got married. Nothing will change." and you're looking over the course of time and of course things are going to change even if there wasn't a deal.
Things may change next week. Something may happen. You know, CMS comes out with another crazy something. Things things need to change. Not because we think they should change, but just naturally things evolve. And we need to be careful not to promise because people rely on that. And then now you've broken a promise and now you have a trust issue. So, look, I think we change a lot less than most, but we still go out of our way to make sure that people don't make that promise cuz they won't be able to keep it. And trust me, we give the same message to our clients. Yeah, things are going to change.
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