**Transcript was automatically generated by artificial intelligence.**

Paul Martin
Good afternoon and welcome to another episode of Paul Martin's crucial conversations today. We are so excited to have with us. Bob. Bob. Bob is the founder and former owner of the Physical Therapy and Wellness Institute and has recently stepped down and retired from his role as the regional director of the Ivey Rehab Network. The Physical Therapy Wellness Institute was prior to the acquisition by Ivey and 11 Clinic business that partnered with Ivey Rehab Network back in February of 2019. And since that time, they have grown to 17 clinics in the Pennsylvania market. IVEY Rehab is a private equity backed physical therapy company based out of White Plains, New York, with currently over 400 clinics in 13 states. So, Bob, welcome and it is great to have you with us today.

Robert Babb
Thank you, Paul. Honored to be here. I've known you for a long time and it's just great to be here and dust off the show a little bit and bring out the new stuff.

Paul Martin
Yeah, you know, it's it's great having the opportunity to do these types of interviews because it's just a great reason to get back in contact and talk to some of our former clients. And especially for you, former friend of mine, friend of the firms, and just a phenomenal client for us. So it's great to have you with us today.

Robert Babb
Thank you, Paul.

Paul Martin
So, Bob, back when we were talking and about you transitioning your company, you know, I know that you had some specific financial objectives for your transaction. Most sellers do. But what else did you want from an acquire that would make one potential acquire more valuable than the other?

Robert Babb
Paul That's a great question. There were so many things happening in the industry at the time and you know, you don't know what you don't know. And many, many meetings we had come back and said, Maybe now's the time. We had two partners. We asked one partner to leave the practice after a period of time. It just wasn't working out so that we were past that stage and now we were really in a reflective mode and 2017 and 18 and had the opportunity to say, Is this the time? And I think every time we came back from our discussions with you and other folks that we're in the industry at the meetings, we just realized that this is crazy, that there's an opportunity out there for us to try to maybe build value in something that we thought was just a mom and pop business. So I think that's what what we were looking for was not only that there were financial objectives, but what what were the shared values of the organizations that we were consider or that were considering us? And it's a very flattering time to have a spreadsheet and see that there were people that were interested in what we did. So what we wanted was shared values. To us, it was culture, it was marketing to our consumers. It was celebrating, celebrating successes with our customers, celebrating successes with our employees. We had built up to maybe 60 or 70 employees, and we wanted them to have an opportunity of a lifetime to grow in areas that they had not before. So we had we had some nice contracts. We want to make sure that those that were in consideration with the with the workman's comp contract, we had done some good industrial work in the area. We had some good strong contracts with the local ABC providers. So we knew that that was important. So I think that that's what we were looking for more than anything was the culture was in a mix with the leaders visible and were we were we able to align everyone together so or, or group of people that had jumped on board with our journey 20 years prior, would they have opportunity to very that was what was the key to us and I think what was most important to us.

Paul Martin
Yeah, yeah. You know, and Bob mentioned culture, which is what we find and it's that culture match that ends up becoming the most important as you look out into the market at a number of different, again, financial offers as well as structure offers. But the structure and the value end up being second and third behind the culture, because it seems as though that cultural match is what we have seen in our experience makes the best opportunity for sellers in today's market. And certainly, Bob, you know, for you guys, we knew early on that that was really, really important. And we also had a really good understanding. Having been working with you over many, many years, we had done valuations, We had talked about strategies. I think we got together in Cherry Hill about 100 years ago and talked through really what you guys, you know, we're looking to achieve. And so having you and us on the same page was just so valuable and going out, you know, as you went through the process, you know, you had a very unique situation. So how did having multiple acquire options in the end end up benefiting you and Jim? And obviously the folks at Physical Therapy and Wellness Institute.

Robert Babb
All had it not been for multiple options, I don't think we'd be having this conversation today. But it blew me away that there were that there were it was just a concept that this was hard to embrace, that there were people out there that had an interest in us. We were just some small mom and pop clinic out of Lansdale, Pennsylvania that happened to grow. And much of our growth was based on intuition, and budgets were foreign to us, you know, for the most part until we started to mature a little bit. So that concept was was something that was hard to embrace. And so we go through this process and we see on a spreadsheet that there's eight or nine organizations that have interest in partnering with us and and to see that on paper and to see it with clarity and to go over it with discussion took three or four weeks. We had the we were listen, Paul, it was new in time, I think that spearheaded this so much with the Martin Group that helped us really start to formulate what the ideas were and how we could help our people, our culture continue to grow. And it took three or four weeks, I think, just to sit down and look at the offers and then another three or four weeks to go through an interview process and then another three or four weeks once we chose what we think was a partner. Unfortunately or fortunately, that partner, when we sat down and we had some candid discussions, it just didn't work. And we were we were in this due diligence period with them and you could say maybe at the 11th hour we had pulled out and said it just didn't feel right. And when we went back and Jim and I had some discussion, we called Tom and said, Tom, let's meet. And I think we had a chance to meet either both you and Paul or both of you and Tom and say, let's go back at it, because emotionally there's a lot invested and there's another one, you know, that you're there and and then you pull back. Had we not had multiple options, we would have started from ground zero. And fortunately, we had you and Tom on our side. So I think that was that was most important why we chose that first partner and then the second partner when we finally signed the first one was simple. We wanted to be first in market and, and have an organization that maybe necessarily wasn't in the Philadelphia suburbs of the Philadelphia area that we could help grow and put our brand out there in a in a bigger way. And and that was a second one. It had come through Ivy, who we ended up partnering with, and we were so blessed and fortunate to have a great culture and a great leadership group there. We wanted the leaders to be visible and I think what have it that we ended up with, I think the best organization that was out there. So had it not been for multiple players and multiple, multiple names on a sheet going through it and going through the interviews, had we not gone through that process, we would have never found that perfect point.

Paul Martin
Yes. And and we remember that vividly. And, you know, it was, again, a time that very a very unique situation for us as well. And I think, Bob, as you know, when you read you started going through this, you know, you and Jim, your level of humility is almost unthinkable. And, you know, you're both so humble. I think you called your nine location practice a mom and pop, I should say, your nine location company that has now grown to 17, a mom and pop. So, yes, you know, you know, their company was one that brought a lot of acquirers to generating offers. And for Bob and Jim, it took a deeper dive to come to the realization for them that they may have left, you know, their best match behind. And so, again, retooled, got right back in the game. And in the end, I think they both feel like, you know, they made the best choice, you know, And certainly, you know, you guys have been at this now for a couple of years. You've grown in addition to you. And Jim, how did having these options and now having made the choice that you have, how did this benefit your people, your staff, your directors, your front line employees, How did it benefit them?

Robert Babb
Well, that was that that was the key. I think when you look back and and see what was them, what was mostly what was the highest value that we had, and it was our people and ideas offered an opportunity for our people to grow in their careers. Many of the clinical directors that are there now had been with us before as their physical therapists, so we were able to get them into a leadership track. They were a terrific mentoring program, the leadership program and lead program that's in-house that we had never had an opportunity when we were pitching W Without Ivy, that was what we struggled with most. We had lost five therapists over a period of the last 15 years that went out, opened their own practice. We we encouraged the entrepreneurial spirit that we had inside our clinics. But in essence, we were we were training our competition at some level. Folks opened up two years later and and became our competition. But we also have had now we've had five additional partners. So the Ivy PTW brand can offer partners or partnerships to new clinics that are opening up for therapists that want to invest. And those are the folks I think were the key. We would have lost them potentially had we not carved out some sort of opportunity. And Jim and I didn't have the ability and the wherewithal or the know how how to create that ladder and either came along and helped build that and bridge that very nicely. So I think the foot and then the administrative staff and don't want to leave out the administrative staff and how important that was to us. We had done in-house collections, we had done in-house billing, we had in-house accounting, all of that was in-house. And over 19 years we were working together. And I we continued to work with our staff and still continues to work with our staff. Two or three folks that are in that that were in that group are now moving up into the ivy bigger fold and working at a much bigger level. So very excited for them and excited for the partners and excited for the clinical directors that now have leadership tracks in addition to building their clinical society.

Paul Martin
Yeah. Wow. And you know, we never met specifically your clinical directors were, you know, worked a little bit with some of your administrative team, but you always spoke so highly of those people and how important it would become that you choose the best partner for those people. And I think, you know, when you know, as I mentioned before, when you go into the market seeking the best cultural match, that tends to be what company's going to be the best for your people. If we could go back to kind of baseline first, getting started, you know, where, you know, we looked at a list of companies, we kind of determined who we were going to look to obtain offers from. Then we went through management meetings with those. How do you think the process enables you to find and acquire that best suited the strengths that you had going through that?

Robert Babb
I laugh when I when I hear you say that because I think we looked at it reverse engineered it a bit in that we looked at what our weaknesses were or weaknesses where we did not have a career track or weaknesses where we did not do any budgeting. Everything was done an intuition and and, and which is terrific when you're opening up new practices and who you have the best relationships with and I had this smart fellow named Paul tell me 20 years ago, drive around in your market for weeks and get to know and knock on the local bagel stores, which I did. And I think intuitively you start to pick up on that. But the sit down and actually have a budget then and go through a formal process. When you open up a clinic helped us understand that that was our weakness and this was their strength. This is where they can bring value to our organization and help us grow it at a level where we feel like we could grow. We had never heard of a KPI before. Paul And we use numbers the official term KPI is now normal in our industry, in normal in our in our clinics. And but we had never really term KPI. What it did do is put all of our clinical directors and all of our leaders better in tune with how we were doing financial and how we were doing with meeting our objectives towards our our patient cycle, the whole cycle from evaluation to discharge and all the key metrics that are in, in that cycle. Everyone has a keen knowledge of that. And now where I think we paid attention to it before, but now it's really tip of tongue you could say. And and again, I can't overstate this is that the growth opportunities were a big weakness of Arch and Ivy helped fill that gap to the point where now we've opened up an additional five or six clinics. They now have 400 and some clinics in the in the country, and many of them here in the Philadelphia area. So we now have four or five sister companies that we can lend resources to and learn from each other, too. So it's a it's a terrific partnership that we have.

Paul Martin
Absolutely. Absolutely. You know, Bob described there again, a lot about growth. And I know going back to our meetings with Bob and Jim, Jim being, gosh, could I use the word maybe a little younger than you, but younger. Okay. So Jim, being the guy that was not going to retire soon and stay in this for the long haul and this was the message that all of the acquirers received right from the beginning that Bob was going to stay in for a few years, continue to drive the growth of the business. Jim was going to stay in for many years. So it was so important, as Bob just mentioned, not to only find a company that would drive their strengths to new heights, but where their weaknesses were, what companies offered, where they had weaknesses, which in this situation was how to go about real growth. I mean, over many, many years they grew to nine clinics, which is tremendous. Over the last 2 to 3 years, they've added another eight clinics. So, you know, this is rapid, rapid growth as compared to, you know, where they had come. So, again, really important finding that perfect match so that you can supplement where you may be weak. So we've talked a little bit about this already, obviously, how things are going with Ivy Rehab. Let's talk about and I know you have stepped back, but I also know, Bob, knowing you, you're staying very close to what's happening with the company and with Jim. How are things going right now and where do you see things now continuing to go in the future? You know, Ivy was a company that when you first started, they had half the number of clinics that they have today. So obviously, a rapidly growing company. So how are things going now? Where do you see things going in the future?

Robert Babb
Well, it's it's it's growth to me that still is hard to even conceptualize because they we have doubled in size. Ivy has doubled in size. Ivy has offered opportunities to additional five partners in our practice. Ivy now has acquired in the Philadelphia area partnered with another three brands. So now those four brands that are in our market or maybe five, if I, if I have that right, all of them, I'm certain someday if I was Michael Rucker, I'd say someday they all have to become an Ivy. Put the Ivy sign up. And I think that's slow, slowly getting there. You can't change that right away because of the relationships that you have, both with the customers in the past and with the physicians. So it is a slow, slow rollout on that. But that will happen, I would imagine, someday for for Jim, I can't be more proud of a guy that I met. You know, fresh out of it seemed like fresh out of high school when it came to us. And he the first interview was with the suit and I said, take the suit off. Let's sit down and talk. And we got to know each other a little bit. And over a period of years, we offered them a partnership. And Jim has now expanded his role. He is a regional director, but also now working in some of the sister clinics that we have in the Philadelphia area. So not only is he touching the PTW brand, but he's touching other brands as well. And I think that role will continue to expand because he is an amazing mind, a great business mind, and he's culture oriented. I think he's going to do really well in there. I expect him to be CEO someday and I'm not. And then, you know, listen, last year I had the opportunity to retire and it's it's something that I, I don't know, you know, still don't know what I'm doing in retirement. I'm enjoying it, waking up. I have four or five things to do every day. I am still in tune with the American physical therapists and doing some work with the private practice committees and and still involved with some local advisory boards and and and other items. But it's it's been a it's been the greatest pleasure to have the freedom to be able to wake up and do what you choose on a daily basis. And you know, I'm very excited about what the future holds.

Paul Martin
And that's awesome. That's awesome. You know, for all of you out there, I will tell you this, that it's folks like Bob and Jim, which is what I do and what we do, what we do to have the opportunity to work with guys, folks, people like Bob and Jim, just make this such a pleasure to be a part of a process. Like we were able to go through with them. And I can't tell you how happy I am for Jim. I'm sorry for Jim with his growth, but as well for Bob to now have the opportunity and I'm going to tell you that Bob is as vibrant and as involved in things day to day as he was ten years ago when we had talked about someday there would be an exit for him. So for any of you out there that would like to have a conversation about your eventual transition exit partnership with a larger company, I appreciate your time today and listening to us and just click below and let's talk. And Bob, I cannot tell you how much I appreciate you coming on with us today. I know you gave a lot of folks out there, a lot of value in having them now determine do they want to have some options for their company. And I really appreciate your time today.

Robert Babb
Thank you. Paul, It's been a pleasure working with you all these years and look forward to seeing it soon. I'm guessing in Colorado.

Paul Martin
You will see me in Colorado and I'll look forward to sitting down with you again. Bob, thanks very much and have a great rest of your week.

Robert Babb
Thank you. Thank you, everybody.