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Paul Martin
Good afternoon and welcome to another episode of Paul Martin's Crucial Conversations. Today we have with us Josh Myers from Orthopedic and Sports Therapy Institute, better known as O'Shea. O'Shea is a once a six clinic business that is located in communities in and around Rockford, Illinois. Josh and his partners were a client of Martin Health Care Advisors and successfully partnered with Core of Physical Therapy back in July of 2019. A little background on Core. Core as a private equity backed company headquartered in Charlotte, North Carolina, and CORE operates more than 225 clinics in Florida, Georgia, Illinois, Kentucky, Missouri, North and South Carolina, Tennessee and Virginia. Josh, it is great to have you here with us today. So, Josh, you and your partners had a very interesting path through your partnership that involved over one year of preparation. Give us some insights on the needs and the opportunities for improvement that you guys O'Shea had coming out of our meeting that we had all the way back in May of 2018.

Josh Meyers
Sure. Sounds good. We yeah. Yeah. At that point, we we were a company of six clinics. We had been in business for over 20 years. We were profitable. We liked what we were doing. But we also realized that we were growing to the point where some of our partners desired to exit the company, and we all of a sudden found ourselves as the leadership team with different viewpoints and different desires for the direction of the company. And so, yeah, we had, we had a lot of good things going on, but we didn't have a lot of great things going on. And I would say the point that we were at is we had actually tried to find a partner on our own and unsuccessfully did that. So we kind of realized and had the hard truth that we weren't real valuable as a company the way we were because we weren't operating as a unified company with an aligned team of leadership. And so, yeah, so the meeting that we had with you a year prior to our acquisition was, was kind of a wake up call. We needed someone to tell us the things that we were doing well, but we also needed someone to tell us the things that we needed to improve. So yeah, we had a lot of opportunities to improve with respect to clinic operations, marketing, employee engagement, things along those lines. But I think the underlying problem was that we had a leadership team and a partnership structure that wasn't aligned, and that's what kept us from taking a good level of operations to a great level of operations.

Paul Martin
Yeah. And yes, there was some work to be done operationally from a referral generation perspective, therapy utilization. And I think you guys were kind of on the brink of, as you said, you know, kind of good to great there. But it was the alignment of the owners that seemed to be at the top of that list and seemed to be what more than likely halted your previous deal. So walk us through the steps that you and your partners took to align your interests for the future.

Josh Meyers
Sure. I think the famous author, Stephen Coby, always says we did with the end in mind. You start with the end in mind. And so that's what we did. We started with the end in mind for what that looked like for the five partners that we had. And then we also started with the end in mind with what we needed to look like to make an acquisition process beneficial for us. So for the five of us, the way that we started with the end in mind was we sat down and talked with each of the five partners and said, Hey, what is a good outcome look like for you globally as a company? We were going to go through an acquisition or a partnership deal, but the details of what that looked like for each of the individual owners was vastly different. Again, two of the owners wanted to exit the company. Two of the partners owners wanted to grow in their roles in leadership and grow the company, and everybody could kind of get what they wanted. And I was kind of stuck in the middle where I could see the potential for the company but realized we were stuck and needed an acquisition to move forward. So the first thing was we started with the end in mind with partners and made sure that all five of us had a desirable outcome when it came to an acquisition. And then with respect to changing our company and improving our operations, we said, Hey, what do we need to look like? What do we need to act like? How do we need to behave as a well-oiled machine so that when it comes time to finding a partner, we can put our best foot forward and have the best possible outcome to that as well.

Paul Martin
Yeah, well said. And you know, I think back now and I can remember back to that initial meeting and I can remember looking at each one of the partners differing in age, differing in, you know, parts where they were kind of in their lives and each one of you individually with a lot of talent and really having a good understanding of your business. But as you said, it was, you know, putting that target out there of this is where and what we want to be. And by becoming that, you you became very, very valuable in the market. And so as you proceeded forward with the plan, how did this you know, let's call it new state of the partnership deal with bumps in the road? Even at times, as I recall, there were some roadblocks. But how did you deal with those things differently than you had dealt with those things in the past?

Josh Meyers
I think I think that that new state of of ownership or leadership gave us clarity with respect to decision making. So historically, we had five partners, six clinics, and every clinic had a different level of ownership from each partner. So it was kind of like, what's in it for me, right? Or How is this decision going to affect my clinic? And that alignment of ownership allowed us to get to a point where every decision was, Now, hey, what gets us to the finish line? Or What's the best for our company as a whole so that we look our best when the time comes to choose a partner or choose an acquisition. So I don't want to minimize the difficulty of some of the decision process, making decision making process. I'm sorry. But at the same time, we were able to make decisions much more quickly and much more clearly and even some of the partners would make concessions to say, hey, you know what, this isn't best for my clinic, but it's best for the company as a whole. And it gets us to the finish line and a better, healthier place.

Paul Martin
Yeah, it's crazy. Once you have that goal in that target in mind and you can see what that looks like, how it impacts and clarifies the decision process for even if it's a single owner. But then when you bring multiple owners into that, all very talented, now you know, you have to have alignment in what that target and what that goal is and you couldn't have put it any better. Josh, you said it's not what's but what's best for this clinic or for my schedule or for, you know, what I'm going to be doing on Thursday afternoons. It's what's best for the company. So walk us through some of the key areas of the business that we talked about in that meeting and how you and your partners approach this work was kind of a do understand thing between owners. What were some of those key areas of the business and how did you expand those areas?

Josh Meyers
Sure. I would say two come to mind. I would say employee engagement would be one and clinic operations would be at the other. So both of those areas hinged on trust. So we had the two exiting partners essentially had to hand over control operations of the company to myself and the two younger partners to to execute in those areas. And so they had to trust us to make sure those things happened. And at the same time, myself and the two younger partners had to convey trust to our current employees and staff that, yes, we're capable of running this company. We're going to make decisions in the best interest of our staff and our patients and make the right choices going forward. So we had a lot of opportunity to improve communication from leadership, be physically present as leadership, be emotionally present as leadership. And I think that went a long way with with respect to our employees, for we had happier employees, we had more productive employees, and they were more engaged. The other aspect is clinic operations. So again, in the past, with the decision making model of what's what's in it for my clinic, you can you can see how six clinics would kind of stray from uniform operations, right? Every owner kind of said, hey, here's what's best for this clinic locally. When we remove that barrier and again, change some leadership structure, all of a sudden we had six clinics that we could say, hey, what's best for the company with these clinics operating how they are, we can look at some of the higher performing clinics in some areas and replicate those practices in other clinics. So it allowed us to really improve our standard level of care and operations, but it also allowed us to excel because we could mirror some of the excellence that we saw in some of the other clinics.

Paul Martin
And Josh, I recall, correct me if I'm wrong here, but I recall that you guys had to do a replacement of a key position, right? When we were getting started in a process going to the market. I believe that was your practice liaison. Walk us through how you guys did that and how you think that would have gone maybe two years prior.

Josh Meyers
Sure. Again, two years prior, the two exiting owners probably would have had a lot of input on that decision. And again, how does it benefit my clinic? Not a bad way. This is how we're all for human. Right? So so that process would have taken a different turn because that person interviewing to come on board would have definitely had some natural biases toward one clinic or another. Based on who's hiring me, I got to lead that process myself and it allowed us to kind of have a clean slate and say, Hey, we're one unified company. This is how we need you to help us, you know, be in front of physicians, in front of our community, in front of our patients. And and I guess in a good way, the person who came on board didn't know any different that we had a history, that we were not unified and came on board into a culture where we had a very unified approach with leadership and with employees that way.

Paul Martin
And I can remember that day Tom came into my office and said, Hey, by the way, our city's practice liaison is leaving the company. And we had already initiated a process. And I can remember just saying to him, Yup, they'll replace that person and it'll go well. And he said, Yeah, Josh is going to take the lead. And they're not worried. And a couple of weeks later he said they had hired a new practice liaison and we went back to the market and made sure all of the acquirers were clear that the practice liaison had been replaced and the new practice liaison was up and running and there would not be any bumps in the road. So again, you guys did such a great job and you were prepared and ready to make that decision and to move that forward.

Josh Meyers
Right. So I think I think.

Paul Martin
Yeah, no, go ahead.

Josh Meyers
Josh, the fact that we were all we were all poised for change. We were all poised for, hey, let's make this company move forward and do things better. We view that opportunity. We viewed that change as an opportunity to say, hey, what's what's improved? Even though our past practices did a great job, we said, Hey, let's take it as an opportunity to get better and to make ourselves that much more valuable to a partner or an acquiring company in the future.

Paul Martin
Absolutely. Absolutely. What a great approach. Not. Oh, my gosh, what are we going to do? Hey, we can probably even do this better this time.

Josh Meyers
Yeah.

Paul Martin
So, Josh, when you look at change, a change in operational numbers, change in financial numbers, change in value, what were the results of all this work that you and your partners did?

Josh Meyers
We that's a way up. We had a goal and we executed well to meet that goal. But I guess in practical terms, what that looks like is before we work with you and your team, we had tried to find a partner on their own, and that resulted in a process where we contacted a company, did some due diligence. That's my on site work and we got to know we were told, Nope, you're not valuable. We said, Hey, how about a low offer? Nope, not valuable that that's what the starting point was for us as a company. And then what are the results of all that work? We probably had ten or 12 partners to choose from. We were in control of the process, right? We got to have the pick of the litter. We got to pick a partner that was going to align best with our current company culture. And we were in control of that, that process. And I think that felt really good to be on the other side of it.

Paul Martin
In terms of value, I'm not looking for numbers, but change in value. So what kind of change did you guys see from where you were when you had the breakup of the breakup versus where you were when you resulted in a successful partnership?

Josh Meyers
Yeah, I would say probably three times even our improvement and probably a ten times valuation improvement.

Paul Martin
Yeah. Wow. Wow. And again, a testament to the five of you guys aligning. Okay. And really, really seeing and as you put it, great, you know, starting with that end in mind, seeing those goals and relentlessly, relentlessly working towards achieving that. So Josh, we have a lot of folks out there that are very interested and anxious to know, you know, if you had some advice for owners out there, both whether the majority owners or their minority owners, because as I recall, you were on the minority side of this, so you have a really good perspective there. How should partners view an acquisition or a partnership for their company? What advice would you have for the owners out there?

Josh Meyers
Yeah, I'd say if your company is growing and healthy, I don't think you need to do anything different because that's that's what we all want. Right. But the truth is, I think a lot of companies aren't growing and healthy. And I think over time, ownership alignment, straight is because, you know, people get older, they want to retire, visions for the company change. So if that's where you're at, that's where we were at. You know, we were at a point where it took an acquisition and a new partnership to move us forward as a company. The advice I would give would be start with the end in mind and talk to talk to all of the existing partners and say, What do you want out of this? What is a good outcome look like for you? And again, the global outcome is going to be you're going to have a new partnership, right? Or you're going to have an acquisition. But the details of that, what that looks like for each individual existing partner is completely different. You've got some owners or partners that can walk away from the company. You've got other younger partners that can grow in their roles and responsibility. And even going through the whole process of kind of prepping a company for sale, you'll learn a lot, you'll grow, you'll be stretched, and you can see some great success with some of those results as well.

Paul Martin
Yeah, absolutely. Absolutely. You know what Josh just alluded to is so crucial and critical in this current market. You know, when we first started talking to Josh and his partners again, very, very talented, all of them, they had built a really strong company, but they liked that alignment and what Josh is saying and I think what the big point that we come out of today is, first, make sure that you have these critical and crucial conversations among your partners. What will this mean to each and every partner and how are we aligned before we go out into the market? The last thing you want to do is to go into the market, allowing the market, allowing the acquirers to have to figure out what to do with your partnership and how to align your roles and responsibilities and how you're going to be moving forward. That has to be put together in a partner plan before you enter the market. And that is the the big takeaway from today. Josh, I cannot tell you how much I appreciate and how how I have really looked forward to having this discussion with you again. You guys were just such a pleasure to work with you guys did such a phenomenal job. I will tell you, it's been since 2019 July that you guys did your transaction and we talk about you guys all the time among ourselves. Obviously, just what a great job you did. And for some of our new staff, we point to you and the transaction, but more the process prior to that as what this really means and what can really be accomplished when you align that partnership and you have partners that are willing to work towards a goal. So Josh, I really appreciate your time today.

Josh Meyers
Thanks, Paul. Appreciate it.

Paul Martin
So for any of you out there that are whether you're a single partner, because as a single partner, you need to have that focus. Or if you have multiple partners and you're looking to align and be prepared for the market, click below, give me a call. Let's have a conversation. Thank you. And I look forward to talking to you in the very near future.