Want to Sell Your Practice Someday? Know These 3 Rules

[00:00:00] I'd love to see you bring your leadership teams as well because we will have breakout sessions for them too. You can get all the details and grab your seat at the link in the show notes. All right, let's get into today's episode. Welcome to the Private Practice Owners Club. Your hosts and coaches, Nathan Shields scaled his practice and exited for millions, while Adam Robin went from working 60 hours a week in one clinic to scaling to multiple clinics while working less than four hours per week remotely.

[00:00:30] This podcast is meant to share with you exactly how they did it and how you can build a business that supports the lifestyle that you truly desire. And don't forget to join the Private Practice Owners Club community on Facebook, where we are obsessed with providing even more resources that help owners, just like you, win the game of private practice. Hey, it's Nathan. Quick heads up for all the private practice owners who are listening.

[00:01:00] If you've been listening to the podcast for a while, you know that it took me at least 10 years of grinding in my own clinics before I finally figured out how to scale and sell my four practices for seven figures and about three times the national average. The biggest shift wasn't some secret marketing hack. It was how I thought about profit, systems, and actually my role as the owner.

[00:01:23] That's exactly what we're going to be working on together with you at the High Performance Practice Conference this fall in San Antonio, Texas. From October 15th through 17th, Adam Robin and I are hosting a three-day hands-on event for PT, OT, speech, mental health, PEDS, pelvic floor, and medical practice owners who want to build clinics that are profitable, scalable, and best of all, don't depend on them 24-7.

[00:01:51] We'll dig into simple profit and KPI frameworks, real leadership and culture work, and practical systems you can take home and plug in with your team. So if you're doing roughly six to seven low figures a year and you want your clinic to feel more like a real business and less like a job slash cage, I'd love to see you there. Frankly, I'd love to see you bring your leadership teams as well because we will have breakout sessions for them too. You can get all the details and grab your receipt at the link in the show notes.

[00:02:21] All right, let's get into today's episode. Hello and welcome to the Private Practice Owners Club. I'm your host, Nathan Shields. And today I'm excited to bring on Paul Martin of Martin Healthcare Advisors who's been helping private practice owners find partners for the past 27 years.

[00:02:40] He is a physical therapist from a previous decade, just like myself, but has been helping owners for a long time in this space, helping find exit strategies and improvement in their business and whatnot. And so after having my podcast going on for almost eight, nine years now, I'm excited to bring on Paul Martin. Thanks for joining me today, man. It's great to be here and anxious to explore what we're going to talk about here. Yeah, exactly.

[00:03:09] Well, it's good to have you on because you are directly plugged in to the mergers and acquisitions market in the therapy space. And you've been doing it for a long time. I have to ask you right off the bat, like we're sitting here in August of 2026.

[00:03:28] And there was a nice hot run on the market for purchasing businesses back when I sold, you know, late 2010s, early 2020s. Where would you say the market is nowadays? If someone's considering three to five years from now or maybe this year or something like that, what would you tell them about the current mergers and acquisitions or M&A market right now? Sure. Well, to understand the current market, we need to go back just a little bit, maybe not all the way back to 2012.

[00:03:58] But if you go back to post-COVID and what we saw post-COVID is there were multiples and there were businesses being acquired for higher numbers than we had ever seen in the history of physical therapy. Primarily, that was during COVID, acquirers were able to get free money. Oh, the interest rates were super low. Interest rates were super low. So they were able to pile up a bunch of money.

[00:04:28] And so there were a number of deals that got halted during COVID and came back 2021, 2022. Those deals got richer and richer and then new deals happened. And so companies that went out and were able to sell their business in 2021, 2022, and even into early 2023 saw a heyday of great pricing, great structures, great deals.

[00:04:55] There was a little uncertainty 2023 going into 24 in terms of interest rates, in terms of the general economy. And so things slowed down a tad during that timeframe. So what a lot of businesses did is they said, okay, we're going to streamline and get ready to go out and do a recap. These are the acquirers.

[00:05:20] They're going to go out, big company and have another large private equity group, acquire their private equity group. And so that was the plan.

[00:05:29] And while that was a well-laid plan, what we saw happen in late 24, 25, and now into 26, most of these companies, 50 to $100 million of EBITDA, have come back empty-handed, claiming that the multiples they were getting were the same as if they had 3 million of EBITDA. And so the big end of the market has really been squeezed, really, really been squeezed.

[00:05:58] So what a lot of these companies are doing is they're going back to acquiring businesses, streamlining their operations, looking for another time where the big, big markets will open up once again. During this time right now, we're seeing probably, I mean, we're predicting over the next two years, there's going to be more sellers than there will be buyers.

[00:06:21] Because all those companies that missed that 21, 22, 23, operating 23, 24, 25 was fairly difficult. Lots of issues with staffing, payers tightening down, lots and lots of challenges. And so a lot of companies are saying, we missed it then, we're not going to miss it now. Companies with under $10 million of EBITDA right now are selling. They're transacting.

[00:06:49] There are acquirers. There are some new acquirers in the market. Again, the companies that went out, couldn't recap, they're back now acquiring. And so whenever you have a market that sellers are rapidly coming into the market faster than buyers, buyers are becoming more selective. Yes.

[00:07:13] And so while there are still many, there's 25 plus acquirers backed by private equity, only one public now, that's USPT. But all the rest are still in the market, still acquiring, but lots of sellers. Okay. And so it's a time where you really need to stand out if you want to get the attention and get to the top of these acquirers right now. Yeah. So they're definitely not getting the deals that they were even a few years ago comparatively. No, it's interesting.

[00:07:42] Not like 21 and 22, but the deals are still good. Are they? Okay. No. One of the big, big companies, I don't name any of these companies obviously, but they said, you know, a company with $3 million of EBITDA will get a 10 multiple. Okay. And a company with $50 million of EBITDA will also get a 10 multiple. Oh, really? When you get $3 million down, we have companies with $500,000 of EBITDA, they're getting sixes. Oh, really? Yeah.

[00:08:12] You know, a company you get up to a million, you'll probably 7 or 8, 3 million, probably a 10. It all depends on the specifics of the companies. But so multiples and deal structures in companies, let's call it 10 million and less, really stayed fairly strong as long as you're prepared, as long as you're truly ready for the market. So if someone comes to you, because you've done this for decades now, someone comes and he says, I want to sell.

[00:08:41] What is your first question? My first question is, why? Is it personal? Is it, you know, potentially a fire sale? I just can't take this anymore. But you always want to understand a business owner's reason why they want to sell their business. Because then we can back into, okay, what's the value? Are you leaving a whole lot on the table?

[00:09:08] And is there opportunity in the short term to gain more value? And simply, are you prepared? Are you really ready? Yeah, because I would assume somewhere in there you're asking, well, how soon are you expecting to get this done? Because that changes the dynamics a ton, I'm assuming, right? It does. It does. Typically for us, we'll take, you know, we call it an outside-in assessment.

[00:09:32] And it's the tool that we use to really diagnose for a business and a business owner, how prepared is your company for the current market? So we look at that company through the eyes of the acquirers in today's market, put a value on that business in today's market. And then again, explore with that owner timing. And are there things, are there levers? These are a lot of the things that you guys do.

[00:10:00] Are there levers that you could pull to improve the value of your business in the short term or maybe even long term? It could be 12, 18 months times these companies are preparing their businesses for the market. And they don't want to leave millions of dollars on the table. I was going to ask that same question. If someone comes to you and maybe they're just kicking the tires, maybe they're in their late 50s, early 60s, mid 50s, you name it.

[00:10:28] But they're like, you know, I'm just kind of, I'm kind of tired. I want to see what the potential is. Yeah, it would be great if there was the potentiality for interest rates to decrease here in the short term, but that doesn't look like it's going to happen because there'd be more free flowing money. But on the average, outside of personal circumstances where, yeah, it has to be a fire sale. How are you coaching these people? What expectations are you laying out for them?

[00:10:54] Typically, we're going to, yes, we're going to take your information and give you more specifics, but typically you need to give yourself this much runway to really optimize the business based on what we see. Yeah, that's a smart owner that comes to somebody and says, I'm starting to think about this. You know, I don't want to do this forever. You know, it could be one year, it could be three years, it could be five years, depending upon what's out there. But I really want to make sure that I'm ready.

[00:11:22] And I think that's somebody who is a really, really bright owner who is doing the right things. And it's very different from business to business to business. Some owners have been thinking and talking about this and have been preparing for this moment for decades. Other owners, as you just said, I'm just starting to think about this. I don't know if I'm ready or what the market is out there.

[00:11:47] But what do I need to know in order to make a good decision on whether I transact or I keep the company longer or I wait and get more valuable and then I transact? Right. And there's internal things with them and their business, but there's also external. You know, depending upon their market, are there businesses in the industry today that will acquire that business and partner with that business depending upon their market?

[00:12:16] And so do you usually see, you brought up 12 to 18 months. Is that a typical amount of time for someone to, I don't know how to otherwise say it, but to optimize their business for sale? Or would you, ideally someone's thinking about the value and the sale price of their company from the beginning, if you will. I mean, if they really want to optimize the profitability and the value of the company, that's a high level goal that they've always got top of mind that we're all going to have to exit at some time.

[00:12:46] Yeah. Yeah. Yeah, for sure. Be in a power position when you do so and not at the time of a potential fire sale. But if you said, okay, you know, the average owner comes to us, do you usually give them about 12 to 18 months to really optimize things? Or of course it could be worse, but would you say three to five year time range is a good time to start focusing? How long does that take? It is.

[00:13:10] I sold my business back in 1997 and we started seriously preparing in 1993 for that event. Okay. So you really have to work backwards. You know, if you start with, well, the transaction process. So when I say this business is ready to go to market, when that business goes to market, it's typically six to eight months to go through a process, to bring all the acquirers in, go through a process.

[00:13:38] So then you have to say, okay, from where you are today to a value that will be meaningful enough for you to want to go to the market. And we have to look at where that is. Let's say it's $500,000 of EBITDA, but to the value they want, they want to get to a million dollars of EBITDA. And there are three things that can get them there.

[00:14:03] There's charge capture, there's schedule management, there's working, potentially hiring more therapists and making a therapist more busy, you know, working on some other metrics that will drive that bottom line. Then we can look and say, okay, those three to four things that you're going to do in order to get those up and running and have enough time to prove it out. It's going to take six months or it's going to take three months.

[00:14:32] Or as you just said, it's going to take 12 to 18 months plus the six to eight months. Now you're on a two year. So it all depends on what within that business gets that business owner to a place where they're going to be willing to transact. They're going to be willing to go in the market and get enough in that deal that it's going to make sense to them. I can see you're coming from a different perspective. And that is more like, well, what do you want to get out of this business? Right.

[00:14:59] That's a higher level of question that the owner needs to understand for themselves is, yeah, you could be at, and when we say EBITDA, for those who don't know, that is an acronym for, help me, earnings before interest taxes depreciation. Depreciation and amortization. Amortization. You got it. Very impressive. It could be similar to net profit. So you kind of close to your net profits, right?

[00:15:26] Say, they say, listen, I want to get $2 million out of this practice. And then you do the valuation and you're like, dude, you're not going to get more than 1.2 million. Right. Based on today's market. Now that now determines you have to figure out which levers you have to pull to. And that's where you do the analysis. And like, if you do this, that, the other thing, this is how you could get to $2 million.

[00:15:51] Now it's up to you to pull those levers and however fast you pull those levers and get things moving can get that valuation to $2 million. But not just you hit the $2 million mark, ring the bell. I'm sure the acquirers want to see a history of something that's along the lines of $2 million and EBITDA for a trailing six to 12 months, right? Yeah. Yeah, for sure. And you can show those changes. And as you go through a process, you're building some more months.

[00:16:21] So you don't necessarily have to wait the full year. But it's, you know, from that owner, what are your goals? Yes. And what is it going to take to be meaningful enough for you to want to do this versus just continuing to keep the company?

[00:16:36] And yeah, and the net profits, you know, that just brings up something that I just wanted to throw in there is that many times the way in which people distribute money to owners, the way in which they may treat their interest in their taxes and depreciation. Most companies don't really have a good handle on what is their true EBITDA in this market.

[00:17:00] I'm always careful with some Main Street business brokers and such, and they're going to want to throw all the adjustments in there and acquirers just immediately will just lose trust and look the other way. So companies really need to know what that EBITDA really is and update it on a monthly basis and see that trailing 12 and what that really is. Then they're in touch with, okay, how do we make changes to that? Yeah.

[00:17:28] And once they start seeing those changes, they get real excited. We've had owners get to that 2 million and say, let's keep going. Let's get to three. Yeah, exactly. There you go. As long as they have some objective reality. And is it enough for owners to trust their CPAs to give them that EBITDA number? Potentially.

[00:17:46] When you get to the adjustments and if a CPA does not understand what a physical therapy acquirer is going to accept in terms of those adjustments. So there are different ways to get to that EBITDA and it's those adjustments that really throw the wrinkle into it. So typically it's someone who has been involved in transactions in this industry that are going to be able to drive that for you.

[00:18:14] Because those adjustments, you know, they go to the bottom line and can inflate the profits and sometime appropriately so. Sure. Because you're saying there might be some adjustments that inflate the profits that the acquirers are like, I don't know if you can count those adjustments, right? Is that what you're saying? Yeah. When you start having, you know, the adjustments are twice as much as the net profit. And the large majority of those adjustments are personal in nature.

[00:18:38] You're just building a big mountain of problems because, you know, you're going to have to explain each one of those and why they're not going to continue on with the business going forward. And so at a certain point in time, it does not become worth getting that tax advantage. And you want to really clean up those books and get them clean and clear. Yeah, exactly. Well, what is helping?

[00:19:04] So you said something important at the beginning or at the front end is that there seem to be more or there will be more sellers than buyers. Either that is the market or that's what you're, that's what you see in the future. Then how does someone stand out amidst the other sellers to say, you know, I'm worthy of purchase.

[00:19:26] I'm sure there's plenty of buyers that are happy to take on a fire sale and then they get it at a cheap price and they implement their policy and procedures and their contracts and whatnot. And they can maybe work it up. That's not always enticing, but if it's cheap enough because it is a fire sale, then they'll jump. But if someone isn't looking at a fire sale, they're looking to sell one, two, three, five years down the road. How do they stand out versus the quote unquote competition? Yeah.

[00:19:54] And I will say that most acquirers really don't want fire sales. Oh, really? Okay. You know, they'd rather have businesses that are operating well, that they can use their continued rate hikes. They can bring up the payer rates and they can use their resources to drive those companies more. So they, they really, they don't want to have to fix things. So the more prepared, as I said, the simplest of preparation is making sure your financials are in order.

[00:20:21] And that realistically could be, you may have compiled financials. You may have reviewed financials, which is the next level for companies over a million dollars of EBITDA. We often will recommend having audited financials. That'll add a turn, maybe two, and it'll make the process much more efficient. Buyers will pay for an efficient process. So the financials have to be in order.

[00:20:49] And that's because when you think about it, well, yes, they're buying your relationships. They're buying your goodwill. They're buying your markets and your relationships within those markets. But in the end, they're buying your cashflow. And if they can't see a clearly defined cashflow and all those adjustments are reasonable and within the limits of what they will accept, it becomes a challenge for them. And they will sometimes walk away.

[00:21:15] I'm assuming it'd be more enticing that there's an owner who has a clinic that is relatively independently operating from them. By that, I mean the owner isn't treating a significant amount of the time. Maybe they've got leadership teams in place that are running systems and there's not a lot of heavy handiness on the part of the owner. I'm assuming those are pretty valuable. Yeah. The value comes in when you have an owner, CEO, whatever you want to call, and you have

[00:21:44] clinics and clinic directors down here. But in the middle of that, you have a leadership group that is often director of marketing, director of administration, possibly a chief operating officer, director of operations among that. Those people aligned and going into the market, all aligned. There's ways to give those folks interest in a new company. They can roll some equity forward.

[00:22:13] When you have that significantly adds to your value and set you apart from other platforms, as well as other businesses. And that's absolutely one of the things that I would say, as you just said, will add to your value. That's one of the key value add is that middle layer of leadership. Tell me if there's going to be a lot of people listening who maybe have a singular clinic, maybe two. And even in those two clinics, maybe there's one or two providers. Are buyers looking for smaller clinics like that?

[00:22:43] Or are they kind of not as excited? What's the market for smaller clinics like that? And how can they stand out? Do they need to grow to three and five clinics and have a middle layer of management? Or do they have an opportunity for a successful exit as well? Yeah, great question. And we work with a lot of single clinics, two, three clinic businesses, smaller businesses. We like to call them locally focused, not smaller.

[00:23:09] And so for businesses like that, it really comes down to the same dynamics. A single site or a two clinic business that has zero bottom line is going to be very hard to transact. Yes. But if those companies are running with systems, if those clinics are being led by not just the owner, but if the owner takes a couple of Fridays off, things go really well.

[00:23:34] If the owner is willing to stay in a smaller business like that, it's essential. It really is, especially if they have not handed. And most owners in single site dual clinics have really not handed the keys to somebody else. So the same, if there's EBITDA, if there's a margin and if they can see growth going into the future, we call those opportunities add-ons, tuck-ins.

[00:24:02] And so we create a map and we show those businesses where the larger businesses are. Many times they don't know because they haven't changed the name. So they're like, oh, that's a USPT. I didn't know that. Or that's a confluent. I didn't know that. So there's lots of opportunities for those businesses that are run well and the owner needs to know the business. They need to know their operating metrics.

[00:24:28] They need to know how their EMR and revenue cycle management happens because they're going to be looked at in the future to continue to run and manage those businesses with resources now, but with additional resources. Yeah. So educate the audience a little bit. I understand it because having gone through it, but for those owners who are looking to sell, I think, and they might be imagining a dream scenario where they sell their practice

[00:24:56] and step away immediately, or maybe just take a month or two and hand things over, be realistic with us. They're usually expecting what? Six, 12 months, two years to stay on? Typically three to five years. Three to five years. People need to build that into the expectation of the sale. They do. They do. Now, are there transactions that owners don't stay three to five years? Of course there are. But owners that want to cut and run, that's good in the past.

[00:25:26] And that's very difficult to do. Now, you have somebody who has been your right-hand man. They're a therapist. They're a leader. You've gone on long-term vacations. Could you look to make that transition over a year or two? Absolutely. But most small business owners don't have that person because that person is expensive. And that person, while many times they're great clinicians, they don't really know how

[00:25:55] to run a practice. The owner knows how to run the practice. And where these private equity groups who are backing these companies have seen many of the large acquirers of the past fail is when they let the owners leave. And the next thing you know, a year later, the owner's showing up around the corner based on they've waited out there, not compete. And so it's really much more of an owner-driven cycle going into acquirers now than it has ever

[00:26:25] been in the past. Gotcha. So that tells me there's an added importance for owners to have some kind of leadership development program. I'm assuming that would add value if they have people in the program and are actually developing into clinic directors and whatnot. And they aren't really hands-on. And then, like you said, they have to know their metrics. They have to have systems in place. If it's all in the office manager's head or the clinic director's head or the front desk

[00:26:52] person's head and not on paper or online, then it's not really a system, right? You're just people-dependent and not system-dependent. And buyers can sniff that out pretty quickly, I'm assuming, right? Yeah. We call that the heroes. The heroes can't have the systems all inside them and know, like you said, nowhere on paper, nowhere where it's a weekly cycle, it's a monthly cycle.

[00:27:15] But those, like you said, small clinics that have those systems built in are still very well sought after, especially if an owner wants to stay and continue to contribute over the long haul. And so the owner, I'm glad you mentioned all this because the owner really has to understand the dynamics that are at play. If they are 65 and they're hoping to sell in the next couple of years at 67, they might

[00:27:41] be expected to stay a few more years and better plan on being there until you're 70, right? Yeah. Yeah. Yeah, for sure. And look, we've seen many owners who come to the table saying, we've heard it's a bad market out there. The acquirers are mean to the former owners. We don't want any parts of that. And then we introduced them to a couple of companies and like, we never heard of that company. We never thought that they had leaders that were physical therapists.

[00:28:10] And we've had companies, they sell their business, they say they want to only stay a short time. 10 years later, they're still in that clinic, maybe three days a week. We had an owner one time in Maryland and he sold his business to USPT, stayed for 10 years. And then USPT found him a clinic in Florida where he wanted to live, that the owner was leaving. He just took that owner's place, fit right into Florida. His business was fine.

[00:28:38] I think he worked with USPT for 15 years. Oh, that's crazy. Cool. Yeah. Well, I want to ask you a quick nuance question because it came up on our Facebook group a couple months ago because someone was looking to sell and there was a stipulation in the sale contract. And these can be written a thousand different ways. But I wonder if you've heard this or seen this a lot recently, or if it's been a common thing all along, and that is, they said something along the lines of if certain people within

[00:29:05] the organization quit after the sale goes through, then the buyout later on could be diminished. The overall sale price could decrease. Are you seeing more of that or is that a common thing or is that just the negotiating point that they can work out? And that sounds a little unusual with people saying if these people leave, the sale price is going to change. Usually it's if there's a worry that people are going to leave, want to have some form

[00:29:34] of an earn out attached to that so that they can prove, no, these people aren't going to leave. And even if they do leave, we're going to replace them and the business is going to continue to operate on it at the same levels going into the future. But I've never heard if John leaves and Mary leaves, we were going to pay you another $500,000, but now it's only going to be $250,000. It's usually more based on performance. Yeah. Okay.

[00:30:01] Now at a closing, before a closing table, they may say that in order for this transaction to go through, we need John, we need Mary, and we need them under non-competes because they are essential parts of your business that you can't run this business without them. And we need to know that they're going to be there at closing and that they're going to be under non-competes. I would assume that most providers, they would, if you're selling your practice, that any

[00:30:28] buyer is going to request that your providers have a non-compete agreement already built in. Leaders, not typically just regular providers in clinics. Yeah. Not typically. Yeah. They tried that for a while and it didn't go well. Oh, okay. I understand that. So someone's sitting there and kind of wrapping it up, getting a little bit more into the weeds. Someone's sitting there and they're like, okay, I need to get more serious about increasing the value potentiality of my clinic.

[00:30:57] Or maybe they are thinking three to five years down the road. What are some of the boots on the ground stuff that they can start doing here in the next couple of days after they listen to this episode? What are some things that you would recommend that they focus on? Yeah. I really believe that before you create a plan, you have to know where you are today. And so I would urge them to get a better understanding of where is their value today and what is their

[00:31:26] goals of what they need to get out of a transaction. And know that depending upon their size, when you look at those goals, there's what you get at closing. And a lot of people at cocktail parties and these old mergers and acquisition guys, you know, I don't mean old in age, but they've just been around a long time. And what they always tell people is you can only count on what you get at closing. Okay. And don't let anybody tell you any differently. Okay.

[00:31:55] Well, in my 27 years, I have never had one client that has not gotten their note. I have had clients that have not gotten their full earn out. Many though, I can say within the last five years, I cannot remember one client that has not gotten their full earn out. Oh, that's impressive. And in terms of equity that they're rolling forward, in most cases, we see that over a three to five year timeframe, double and sometimes triple. Nice. Nice.

[00:32:24] So you really need to see is not just when you're setting those goals, not just what you're going to get at closing, but somebody has to go through with you what typically happens in a deal to see what you'll ultimately get. And are you better off with a large umbrella acquire with unlimited capital systems and processes, resources, or are you better off just trying to fight this on your own and get

[00:32:49] there to a point where what you get at closing is what you really want out of a deal. So there's two things you get out of deal. What do you get out of the beginning of the deal and what you get out at the end of the deal in most transactions that are happening in this industry. So a business owner really has to take a look at that. So that's the first thing I would have them do is what's my value today? And what are my goals? And how do I get to my goal?

[00:33:15] Because if today, you know, I have a son, he lives in, he lives in California. He lives in Santa Monica, California. And if I were to right now say, I'm headed to California to visit my son. I don't know if I could do that without a map. Sure. It's a long way away. And there's lots of turns to take and there's lots of things, but I need a map. And so the plan on how you get to that point where you can say, okay, now my business is

[00:33:44] ready and I can choose to continue to run it and make it more valuable, have more cashflow for myself and my family, or I'm at a point where I can choose to take this business into the market and do a transaction. And so if today you got to know where you are, and then you have to develop that plan to get to where you want to get, and then don't go in a closet and not share that, you know, your leadership group needs to be aligned with that.

[00:34:14] Now, do you tell them it's about a transaction at certain times? No, because many of those folks need to be brought along. And at a point in time, yes, you could look to align them, have them somehow grow into some equity. We have some gross share programs that we've used that these leaders can grow into equity. Now a transaction is only positive for them because they're rolling their equity into a new bigger company with more resources and that equity can then grow and grow and grow.

[00:34:44] So it's developing that plan. Those are the two major things that I would tell you to do. Where are you today? And what do you need to do to get to where your goal is? Yeah. Cause you definitely want to put your position in a, you don't want to be going to the table as this is a weak option for me, or there is a power imbalance and you want to be the one with the power that says my company is running well enough, spitting off enough money. It's essentially an ATM. I could sell it or I don't.

[00:35:13] I mean, but I'm, maybe I'm kicking the tires to see what people will pay. And if they match my number, then we can have some serious negotiations and go forward with some due diligence. But if I don't, if they can't, then I'm fine with where I'm at. And that's the ultimate power play is like either. Nathan, that's leverage. That's called leverage. That's leverage. That's real leverage. And you get that leverage when you're at a point where you really don't need to sell your company.

[00:35:40] You also get that leverage when you do go into the market and you have more than one offer. It's really difficult when you have one offer to then have any leverage with that acquirer versus, well, I have five indications of interest here. Let's put them. This is the highest. This is the nexus. And that's really analyze these. That's when you have leverage as a seller. Yeah. And you really need to consider that part of your responsibility as the owner, right?

[00:36:09] Like, cause I said, you're going to leave, you're going to exit sometime. It's just, is it on your terms or not? Absolutely. And don't always have it be just the company that called you. Yes. Because before we sold our clinics, I think we had had like three or four offers before we finally landed on the one. You did it right, Nathan. Right. Right. And the question was always, what does our life look like after this sale? Right. Yeah.

[00:36:35] Did we sell just so we can become well-paid clinic directors 40 hours a week again? That's not how we got into business. Right. Those are some of the conversations that we literally had when these offers were presented to us. And we also understood that it wasn't the final sale price number that we had to look at. We had a mentor that was smart enough to tell us it's not about the number. It's about the terms. And the terms make all the difference. You know, you could get $10,000 a year for the next hundred years, or you could get a million

[00:37:05] dollars up front. The sale price is the same, but the terms make a huge difference as to whether or not you want to sell at that time or not. So we were able to focus a little bit more on the terms and what our life looked afterwards. And that really made it easier for us to say yes or no, because I'm assuming you see it quite a bit. There's plenty of buyers that are reaching out to potential sellers. And they're doing what they should be doing. Yeah.

[00:37:31] My owner friends of mine, they're getting hit up a couple times a month with opportunities. Absolutely. And they need to be smart about it, right? Yeah. We always say, and you bring up a really good point where structure is more important than price. I 100% agree. Before structure, we always say culture. If there's a culture match and a culture fit, and the only way to really understand that

[00:37:56] is to get in front of somebody in person and have those real difficult discussions, ask those hard questions. So the culture match first, then structure, because there's my Tom Carden, who works as our managing director of M&A. He always says, there's 25 different flavors of ice cream out there in this market. Every company brings a little bit of a unique structure. And so that structure is so important.

[00:38:24] And what will work for you, Nathan, won't work for me and won't work for somebody else. So it's really important to do the full array of structures and then price. You have a company that's paying a 10 multiple. This one's paying a five. The structure is going to be pretty hard to beat with a five compared to the 10. But price always comes third. Absolutely. I did have a friend last year who sold. He was excited about the potentiality of it and what this new acquirer could do for him.

[00:38:54] I think it took maybe six, eight months before he split from them because... And it's inevitable. You have to expect there are going to be changes. And not knowing the details of his situation, I can't speak to what went wrong. But I know a significant number of changes came into play, which led to a number of his people on the team leaving and him having to figure that out. And he had discrepancies with the acquiring company.

[00:39:23] That's where when you're talking about culture, you've got to expect some things are going to change. But I call it value alignment. If you guys can be on a shared values basis, then maybe that culture meld can actually work well for each other. If values are a part of your culture, you have to have that value alignment. And like you said, it's not uncommon.

[00:39:47] Well, we did podcasts and we brought on 10 large company CEOs acquirers. And we all asked them the exact same question. What's the biggest lie that acquirers will tell sellers? Number one. Number one thing they all said is nothing is going to change. Yes, it is going to change. And if you have not built a culture of change, you could be in for...

[00:40:16] And if you know the limits of what your culture is going to, you've got to really test it out before. And you can only test so far. And sometimes you test and test and test and you really... Maybe you did make the right and things can happen. But typically when you've talked to 10, you've worked it down to 5, you've got it into 3 and you've choose 1, that's at least your best opportunity that there's going to be that culture match. Right, right.

[00:40:43] We've covered a ton of stuff and I thank you for sharing and also sharing your time and wisdom. Is there anything you want to end with as we wrap things up? Yeah, I think more than anything, again, a lot of folks will say out there, this market is uncertain. We don't know where this market is going. We don't know what's going to happen. What we're saying is that there is a market out there today.

[00:41:08] And there are acquirers that are coming to processes and are bidding for companies and are doing really good jobs, post-transaction, integration, et cetera. So the only time you can sell your company is when there are buyers. We had a company the other day, they said, you know, we're thinking maybe we'd go into 28 because if we can sell the business in January, we're going to save taxes.

[00:41:33] So if we can, I said, please do not pit your destiny for a $5 million transaction purely on you're going to save $25,000 to $30,000 of taxes. Yeah. So that is the market is there right now and there are acquirers. And so there's, you don't want to be at the negotiating table and not prepared. So you really want to start preparing today.

[00:42:00] Well, you mentioned some podcast episodes. What's the name of your podcast? It is The Next Level Owner and we have it on YouTube and I've done, well, I reached my 300th episode about eight weeks ago. So I don't know if that makes me old or it just means have some experience here, but yeah, no, we've done lots and lots of episodes. I love doing it. I love doing stuff like this, Nathan.

[00:42:28] And so, yeah, when we can get in front of physical therapy business owners, we jump in front of them. That's so cool. And how can they find you? Yeah. www. It's very easy. The name of the company, www.martinhealthcareadvisors.com. I'm glad you said advisors because everyone's going to be an S E R or O R. O R. Yes. Advisors.com. Yes. You got it. Great. And everybody can see you at PPS. You're there every year.

[00:42:55] You're going to be holding a session there at PPS. So they can look out for that as well. And get in touch with you. Myself and Steve, Steve Salzer. Yeah. Myself and Steve Salzer are going to be doing that. And I'll also be at therapy con next week or this week. What am I saying? This week. Yeah. This Thursday. Well, unfortunately our audience won't be there that quickly. This will probably release in September, but they ought to look out for you at PPS and absolutely podcast for sure. Thanks for taking your time, Paul. I appreciate it. Yeah. Great talking to you, Nathan.

[00:43:27] Thanks for listening to the Private Practice Owners Club. If you enjoyed this episode, would you mind doing us a huge favor and leaving a review? This helps us get the podcast out to more clinic owners to help them create greater freedom and profits so they can own their future. And visit our website, ppoclub.com to find more resources and connect with us.