Darin Tucker Interview: Peak Physical Therapy and MHA

Transcript

In Darin's words

Starting Peak as a PTA

My name is Darin Tucker, and I'm one of the co-founders and CEO of Peak Physical Therapy.

I always knew I wanted to own. I'm just one of those cup-half-full type of guys. When I got my first job, I was an athletic trainer and a tech for a physical therapy clinic, and I met my future business partner there. He was the one who said, “Hey, if you're going to own, why not just go the PTA route? It's going to be less expensive.” In the State of Idaho, you don't need to be a PT in order to own a practice. So he planted the seed, and it's with that same gentleman that I went into business in 1999.

As far as what doors felt closed, I really didn't see any. As a PTA, there are some inherent dependencies, so you want to make sure your relationships are great, not just with staff but with your business partner. He's a great guy, we did great things, we loved PT and we fed off each other's energy.

So we jumped in the pool of ownership, found out what we thought we knew, and found out for sure what we did not know. Our enthusiasm caused us to jump in with virtually no experience and no money. But we thought, “You know what? We can do this. We'll figure it out.” That enthusiasm is what helped us win with patient care, because emotion is infectious. The business just allows you to help more patients, more physicians, more communities. It's a larger game, but it starts and ends on the floor, always.

From treating patients to leading 12 clinics

I owned for 25 years, and I treated full-time for about 23 of those. When you're in the trenches doing patient care, what a great place to be. When you're stressed out and you're on the floor, it all goes away. And when you're trying to solve problems with systems and organizational things, you always fix it on the floor.

It also lets you control metrics like salary, wages and benefits, and it lets you test the policies, procedures and systems of the organization. Anything we ask an employee to do should make sense and should be doable. If you can't do it yourself, how can you ask someone else to?

As we developed the systems at Peak, we had to think about managerial systems. They should be simple, they should be fast and they should be accurate. No one wants to spend a lot of time in meetings and doing admin work, so it forced us to build efficient systems.

Learning the business side

About two years in, it became very clear that we loved PT and we were good at PT, but we didn't understand the business side. We gave the business what we thought it needed instead of what it truly needed, not just to survive but to thrive. We were tripping over our own feet.

So we spent a lot of time and a lot of money on more education, and that's when we really started to cook with gas. The more we learned, the more we found out what we did not know. That perpetual cycle led us to become a large organization employing a lot more people.

Positioning to sell, years ahead

As an owner, one of your products is always selling your company, always. So that always has to be at the forefront of your thoughts when you're running things.

In 2014, about eight years before we sold, we started looking at that. I talked to brokers and some of the national players from the East Coast to the West Coast, so we could better position ourselves. If someone wants to partner with you or acquire you, you'd better be attractive on the business side. I wanted to see what that looked like, and then have time to position.

Why Paul and MHA

When I got to the point where it was time, I reached out to Paul. I'd talked to a lot of brokers, but I'm from Idaho. I was looking for someone I could have a nice, friendly conversation with, someone who felt genuine.

Paul flew out on his own dime, and we sat down for lunch. We had personal talk as well as business talk, and that made it an easy decision on the human side. I love PT and I love the business side of PT, and I wanted someone who appreciated that and was the exact same way. Now we just get to sell a story, and it's backed by the metrics of the company.

He went back home, and I decided pretty darn quick: “Yeah, let's just do this thing.” As a company we were always positioning, but then you get to the time where you have to be serious about it. First it was staging, and then it was preparing for the dance.

Why use an advisor

It comes down to what you have at stake and what your goals are. Your goal is to sell for an attractive figure, or to make sure you got value out of your company. Do you feel like you were exchanged with fairly?

You have so much to lose, because your identity is wrapped up in it. Your family is wrapped up in it, your business and all your employees are wrapped up in it. Someone asked, “What do you stand to lose?” Everything. As an owner, you sleep the business, you wake the business, you stress about it, you smile to it. It's your person.

I contemplated doing it myself. I looked at the number of people I had met that I could potentially court, and it pales in comparison to what Paul and his crew have. So I thought, “No, we need to fish with multiple lines here. We need to use a guide so we get the best catch.”

They help protect you from yourself. Sometimes we have well-meant intentions that are poorly executed. They take the lead, do the legwork, and make sure your portfolio is presented very professionally. There's an expense with this, but I can tell you, I got a heck of a lot more out of it than I put into it.

What MHA helped me see

After eight years of getting ready, I had a pretty solid idea of what folks were looking for, and I thought our ideals and business metrics were strong. But I didn't have the data on what that looked like next to other organizations. I'd never had access to any of that.

So we started working with Martin Healthcare Advisors with an Outside-In Assessment, so they could look at our performance as an organization, build value and provide recommendations. We started the assessment in about 2020, and we sold on December 31, 2021.

They got inside my organization at the highest level and could tell me where we were strong, where we were weak and where we needed to improve. I also had zero clue about what healthcare M&A was doing day to day, and they have that information because they're in contact with all the major players.

Once you've worked hard to get your proverbial A in all your areas, it becomes a timing question. With recessions and COVID, we were all over the map, and they helped with timing. Then they teed up the companies they felt we'd be a good fit for. For me, it was very philosophical. Just like any relationship, if you think alike and act alike, it goes well. Good people do good things, and good business comes out on the back side. The decision came down to me, but they knew me well enough to bring the right people to the table.

Telling the staff

I dreamt about that experience, because you stress about it. It's an exciting time in your career, but your staff are close friends and people who bought into you and your organization. You never want to let anybody down. For an owner, it's the last chapter of their ownership story, and it's inevitable.

I started with my top three people and talked about potential changes, so you can read the room and start with your decision makers. Then it's a slow rollout from there. Most people were really good about it, because they get it.

Advice to a PTA where I was in 1999

To other PTAs: there are no restrictions. They're all self-imposed. People worry about the regulations, and that's where a great PT ally is super good. As you grow, you hire for administration. As a PTA, you have restrictions, but they don't limit what you can accomplish in physical therapy. Passion will drive you, it will sustain you, and it will determine what you get or do not get. So love it and apply it.

What MHA made possible for my family

Martin Healthcare Advisors helped me execute my business transaction and gave me back the two things I sacrificed a lot of over the last 25 years: time and money.

Now I have peace of mind, and I have the time to give back to family. When you own and when you work, it's unfortunately to the detriment of your family at times, and that's one of the regrets owners can have: I should have spent more time. So work hard, aim high, position to be the best, and get someone who can tell your story, like MHA did, so you can reap those rewards. They gave me back what I put in, to an exponential number.

About the fee

Every owner is going to be apprehensive about the fee. I'll tell you a personal story. There was another owner in my region, one of the biggest organizations in Idaho at the time. He was working with MHA, and he said, “I think I'll do it myself.” Instead of paying that money, you think you'll just put it in your pocket. It went really sideways and cost that owner tons and tons of money. People always balk at the fee, but what do you stand to lose? You could be in that owner's boat, starting over. That's a haunting, horrible feeling.

I did the books myself for 25 years: reconciliations, data entry, all of it. I know the metrics and finances at a very high level, and every penny matters every single day. So when it came down to selecting MHA, I put on my CFO hat and cinched it down tight. I looked at it. I re-looked at it. And it's totally worth it.

In the negotiations, Tom was very good about protecting me from me. “Don't talk to anybody. We'll do the talking.” He set up the on-site meetings and came out to visit. At one point, I'd have been totally happy with the EBITDA multiple we would have gotten, and he said, “Nah, we can do better.” Sometimes you'll settle for less because it's better than what you have.

But they know the market. They know the players, which ones have won transactions and which ones have lost. I never have those conversations. They'd say, “These guys are itching. They're right down your alley. They've lost the last three transactions, and unless they step up, they're going to keep losing.” So they said, “We can do better than that.” I could never do that. I couldn't be happier. Tom and Joe are good people you can have coffee with. I still email them on my anniversary.

Knowing when it was time

Sometimes you question your exit. When you love what you do, you can work forever, because it's not work. But I went back to a journal entry from when I was 10 or 11 years old. It said: I want to work hard, retire early and spend it with family. My whole goal from 40 years ago was to grind it and then go play. So it's time to give back what we've taken, and that's time from family.

Martin Healthcare didn't rush me to the door either, which is very important. They asked who I am and what I want. Even when I thought I was ready, there were times they said hang on, because the market was going to rebound. You need that guidance, and you'll never have the experience that team has. Their collective intelligence is astronomical.

Martin Healthcare Advisors, thank you very much. And my family thanks you very much.

Shared with Darin Tucker's permission. Transcript lightly edited for readability.

Read the Peak Physical Therapy case study →

Darin Tucker on building Peak Physical Therapy from a PTA start to a 12-clinic partnership