3 Clinics To 21: Who Ran Our Transition
Who should represent you when you transition your PT practice? Paul Martin goes back to 1996, when he and his partners sold the 21-clinic company they built, and explains why who represents you determines your outcome.
Full transcript
Generated from the episode audio and lightly edited for readability.
When you do it on your own, you will have no leverage. You increase your risk of a confidentiality break. You will essentially give the steering wheel over to the acquirer, and that's the last thing that you want to do. So I promise you, hire somebody to help you with this. You don't wanna be the only one at that negotiating table that has never truly gone through this process before. 1996, we sold our physical therapy company and we hired a specialist to do it. Again, back in 1996, it was myself, two partners, and we sold the company that we had built from three clinics to 21 clinics in just three years.
We did not hire a business broker. We did not hire an investment banking firm. We hired Alan Cox from Cox & Associates. He was a former CEO of a large outpatient physical therapy company, and he got us to the best finish line with the best company that was available at that time. And that is the day I learned something.
Who represents you determines your outcome. Everything I have built since for Martin Healthcare Advisors is me building a better version of what Alan Cox did for us. So when we were acquired, I made the absolute best of the time that I spent with the acquirer. I worked in the acquisition department. I spent time right alongside of those who were creating the deals that were being brought in.
In one year at NovaCare, we did over 17 transactions and did over $500 million of transactions in one year. We were extremely busy. During that time, I also got what was called a certified business intermediary through the International Business Brokers Association, and since have what's called an AMI, which is a merger and acquisition mastery intermediary.
So I really created and put myself in a position to start, create, and build Martin Healthcare Advisors. Now, as I learned through the International Business Brokers Association, I took a lot from the Main Street business brokerage world, a lot. Now, Main Street business brokers typically work with what we call Main Street stores and businesses, hardware stores, et cetera.
And what they're really good at is going right alongside of the seller and walking them through every step of the process. They run a fairly professional process. But they're very good at understanding the needs of the sellers and the emotional times that they will go through. Because as your business is the greatest asset, business asset, that you will probably ever have in your lifetime.
So you wanna be really careful where you place it, and business brokerage and business brokers do a really good job with that. Now, in addition to the training I was receiving, I also got a really good taste of what large investment banking world and what that brings to a transaction. Process.
Extremely disciplined process of being able to line up multiple acquirers all at the same time, and dropping that checkered flag and providing them with high level materials in order to go through a process and to create a competition. In addition, large investment banking firms are very good at analyzing what you need in your financials in order to get through a due diligence that an acquirer backed by private equity is going to put you through.
Investment bankers are extremely good at that. So what I decided to do is I decided to hire investment bankers, including CPAs, who are very good at due diligence, and trying to match what was being brought from the large investment banking world. And in addition, we brought in people who have a pulse and a heart and truly care about the outcome of every transaction we do, and that starts with the connection with the client and what the client needs and wants out of a transaction.
Because typically, there's a long period of time after a transaction. So I brought in high level professionals to do that similar to a large investment banking firm as well as a business brokerage. But I added the most essential piece to the puzzle that I was trying to create, and this is the key. We have also brought in five physical therapists, all who have owned, built large companies, and have since sold those companies.
Who better knows what a seller is feeling going through the process than a physical therapist who owned a company and has been through that exact same process? Two of those physical therapists, including myself, which makes three, have gone and gotten their certified business intermediary and mastery intermediary levels, so they are also extremely poised as it relates to going through a process.
But we also have the investment bankers, the CPAs on our side in order to drive an extremely professional process. It's what I always dreamed of doing for physical therapy companies. Now, what we have done that I also think is very unique is we've developed teams. There are folks that are on similar teams, but we've developed specific teams that handle small companies that we call locally focused companies, medium-sized companies, let's call it companies with three to 20 clinics, and then large companies, let's call it 20 plus, 50 plus, up to 100 clinics.
So we have very distinct teams that works with each size level of businesses in this industry. And most importantly, everyone on our team has developed strong relationships with acquirers, which has enabled those acquirers to respect the deals that we put in the market. We only work for sellers. We do not work for the acquirers.
But they know when we bring a company into the market, that the process is gonna be fair, and if they are able to bring their best, they will end up winning that process. So this is something I've always dreamed of. It is here now, and I think the last piece of information that I have to bring you today is, again, whatever you do, whether you use a business broker, whether you use a large investment banking firm, or whether you use a specialist team that brings large investment banking as well as business brokerage and physical therapists, don't do it on your own.
When you do it on your own, you will have no leverage. You increase your risk of a confidentiality break. You will essentially give the steering wheel over to the acquirer, and that's the last thing that you want to do. So I promise you, hire somebody to help you with this. You don't wanna be the only one at that negotiating table that has never truly gone through this process before.
If any of you wanna have a conversation about who you should choose to represent you if you are thinking about preparing and going into the market, just click below and let's talk.
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