The 5 Things That Acquirers Value Most In A Partner

Now, number three, diversify your payer mix. Wait a minute. H how do we do that? So, if there's a large percentage of your revenues that are coming from one payer, that's a real red flag to a buyer. You really want to try to spread your risk with your payers. Consider adding some specialty services. Pelvic health, vestibular, sports performance, dry needling. Broader services attract broader patient populations and they reduce singlepayer dependency. And you can actually gear your marketing efforts towards those physicians that will send you patients from the payers that pay the most and that you want the most.

And then number six, get to the top of the buyer's list. How do you do that? Be able to tell the story of your practice so that it inspires the acquirer to want to become a part of your future. That's why I left this one for number six. And this is how I really believe you get to the top of that buyer list. Plan ahead so that you are able to give another three to five years after you partner or sell to an acquirer. Those are the businesses that will always get the highest multiple as well as the greatest financial outcome.

So from a buyer or a PE private equity perspective, what does you know kind of clean and audit ready? Not for financial, but when it comes to payroll, HR and compliance documentation. Yeah. So for me, clean and audit ready means that payroll and HR and compliance all live in one system, right? When you look at what the payroll looked like, what the tax filings look like, they're going to match up, that all the records are current, certifications are in, compliance documents are actually just easy to produce.

They could be pulled within minutes. And fundamentally centralizing things like that makes diligence move a lot faster because, you know, there's less risk in the business and I would say it helps with keeping the enterprise value higher because you know, everything is done the right way and you're not taking on problems. Yeah, absolutely. Easiest way to describe it is, you know, if you're investing in your infrastructure, you are going to see a better outcome when it comes to valuation and options once partnership conversations start. So, as you can tell, I love a good analogy, but it's kind of like buying a house.

You know, are you going to pass off a fixer upper or are you providing a home that's movein ready? You're going to see that number and the offer that comes your way and how many offers come your way for you to choose from. The biggest the biggest change or issue that we've seen is compliance and you know what is your compliance program and you know most of the smaller companies you know think they have a really great compliance program and they think they have a really great compliance manual and then you know you get you know these bigger organizations that you know can't risk their whole business because they bought your business and you've got a Medicare problem.

So, you know, we're really advising, you know, hire a compliance consultant, have them come in, have them, you know, observe, you know, your therapists, look at the notes, you know, look at this how you scheduling patients and make sure you are compliant because everyone thinks they are, but I don't know, Joe, there's kind of I don't think there's been a deal where we haven't had somebody have to tweak something. All right, let's conclude with a conversation about the staffing shortage we have. How does that show up in your deal negotiations and are buyers applying discounts or pushing back more than in past years if a company is struggling to recruit therapists?

I think they're looking more at the overall staffing census of a company than they had been say three, four years ago. Some of the biggest impacts are going to be, okay, what's your overall turnover looking like and what's really that average tenure of your professional staff? Actually, not even professional staff, even your front desk personnel. There are a lot of people invol every person in those clinic locations that they do they do matter. They may not all generate revenue, but they matter. So we wouldn't say discounts being applied, but there could be times where say you have three, four therapists leaving in a two-month period and you want to get out to market.

Well, what's going to happen is your numbers are going to dip. You just lost a sizable portion, talking about, I don't know, maybe you lose 5% of your staffing with that. You just lost a sizable portion of your clinicians. Numbers will probably take a hit. It's not going to lead to an effective process. And that's where discounts can possibly be applied where those numbers start hitting your financials two, three, four months down the line at which point you're in the diligence process and you're trending downward.

That's that's something that's going to lead to some delays. The folks that I've interacted with that are fortunate enough to have to be on their second or third call it transaction of sorts, I think you'll find them that they are way more laser focused on the fit and culture side more so than the financial because they've had that experience to sort of learn of it. I think the most successful founders that we work with are very collaborative in nature. And they're not only open to ideas, but just as importantly, they're bringing great ideas to the table as well.

And I think where the magic happens is they're many of them have these great ideas and either haven't had the time or the resources to execute those ideas and partnering with Thrive has allowed them to unlock the potential within those ideas. So when they bring great ideas to the table, collaborate with us around that and then we can bring whether it's you know capital resources whether it's you know functional expertise or you know any other experience to help them unlock those and really go execute those.

Those are the groups that we have seen just that have had exponential growth and have really blown it out of the water with regards to their success over the you multiple years they've been partners with us. 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 nostalgia and legacy.

If you're coming in with a nostalgia mentality, this is the way it used to be. Corporate punches to do this. Ivy's 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 the clinic because I built that team 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 a 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. And that's not an exaggeration. That's a real number of how people have grown. People who have