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

Carter Schelling
Good afternoon. I'm Carter Shilling, director of business development at Martin Health Care Advisors. I also had my own consulting firm, 3655, Inc. And for the last 43 years, I've helped business owners build extraordinary companies in ordinary industries. We're in the middle of a series of shows about creating the most valuable business plan you've ever created, the plan that helps you prepare your company to get the best possible deal when you sell it. And today, we want to talk about strengths and weaknesses and how how fundamental they are to your valuation, because your valuation is built on your strengths and weaknesses, so that if we talk about the best possible deal by getting the most money, the best structure and the best acquirer, we're going to need the best possible strengths and weaknesses.

Carter Schelling
Okay, It's clear and nobody we've met walks up to the table with the best possible strengths and weaknesses. Everybody gains on the day of the sale from getting better. Strengths, weaknesses than they started out with when they first met us. Better than industry. Average KPIs, etc. for the performance of their business and exactly what the acquirers want to see. Because as you'll learn from the interview I'm about to do, acquirers look at the performance of your business differently than you do. They have different objectives, different rules, different experience, and they're the ones with the money. Finally, exactly what your acquirers want to see. Certain acquirers are better candidates to be your best partner than others. You want to tune your performance, the performance of your company perfectly to match what the best possible acquirers for your company are looking for. Do you get a closer look at this? I interviewed Dave Pearce, who's a member of our preparatory consulting group. He spends all of his time helping our clients prepare for the best possible deal. I think you'll enjoy the interview and see what I mean about best possible strengths and weaknesses. We'll get to that now.

Carter Schelling
Today, our guest is Dave Pearce. Dave is a important, integral member of our preparatory consulting team, the team that helps companies get ready to get the best possible deal when they sell. I've asked Dave to join us because he is the man who knows the answers to the questions you get asked about. What does it take to get the best possible deal? Dave, thanks for joining us. Let's tell us a little bit about your background, how long you've been doing this and what's it like.

Dave Pierce
Yeah, thanks, Carter. So kind of start at the beginning, but I'll give a quick summary. So I'm a I'm a physical therapist. I've been a physical therapist since the mid-nineties. My wife is in health care also. She's a physician assistant. And earlier in our careers, we're in Southern California. And we realized pretty quickly that we needed to make a drastic change to try to get ahead financially. So we relocated all the way out to eastern North Carolina, a good opportunity for my wife to work in orthopedics. And I saw that area as a really untapped area for physical therapy. And so started our first private practice out there in eastern North Carolina in 2001. And a lot of that was very much right place at the right time, very underserved. Our company grew quick. We grew to six locations in about four years. And honestly, it was completely overwhelming. I was fortunate to turn to Paul Martin from an introduction from a friend. Really help come in and put a lot of rhyme and reason behind our business. And then it enabled us, after about ten years in practice, to actually move back to California, to be closer with family and friends and run our practice from a distance. So we did that for about five years and then we started the initial phase of selling our practice again with Martin Health Care's Help. Specifically Paul Martin and Tom Carden. We went through an initial sales event in 2011 and we were still tasked with running the company for about five years. So we did that, kind of made it through that five years, and then sold the remaining piece of our company. But in that interim phase after 2011, I was at that next phase of what's next. I was still treating patients a little bit, but but really wanted to come back into the field in a different way and help private practice owners. So with Paul Martin's help and encouragement and guidance, I started on the consulting side, really enjoy that part and not, you know, kind of morphed into doing more and more M&A work where I really feel like I've found my niche. I really enjoy coming alongside private practice owners, helping them get their business to where it needs to be to get the outcome that they're looking for. And it's just been a great, you know, past decade of working with these private practice owners to accomplish their goals and dreams. And it's just a great path that I never thought I would find myself in.

Carter Schelling
Terrific. What a story. Now, remotely for five years. Yeah. Amazing.

Dave Pierce
Great people in place, Great people running operations.

Carter Schelling
That's the lesson. It's a lesson. So I invited Dave because some owners aren't doing very well and they need to get up to just average to be able to sell for the number that they're looking for. Others doing very well, but they don't want just a good deal. They want the best possible deal. And to get the best possible deal, you need to have the best possible in that SWOT analysis. Strengths and weaknesses. And you need someone who understands the marketplace to tell you about that. So first, the first level of our work is you've got to help people improve their performance to levels that are acceptable to acquire. So you tell me a little bit about the kind of changes you can achieve and how long it takes.

Dave Pierce
Sure. Yeah, that's a great question. You know, we obviously deal with with owners, operators at various levels of success and profitability and coming along side those owners. Operators with our knowledge of the buyer side really helps us take a close look at where those strengths and weaknesses lie. From a buyer's perspective, and that's really the the most important piece we do with a lot of owners who when we work on that SWOT analysis, they identify their strengths and weaknesses and, and they may be very relevant in their mind, but oftentimes they might not be as relevant to the buyers. So when we come alongside a practice, you know, the first thing that we're looking for is usually kind of financial and ops success, you know, how are you doing with that? But we're looking at many different risk factors from a buyer's perspective because our job is really to, you know, accentuate the strengths that the buyers care about, diminish the weaknesses that that may be part of your practice if we're going to eliminate the weaknesses, that's even better. And then really, you know, the two big factors that are that are current in the buyer's eyes now is what's the future look like? You know, you've got this great practice, you develop all this great goodwill. What's next? Because their interest and purchasing you and offering the best value for your practice goes up. If you've thought about that and mapped that out, including, you know, growth plans but also who's going to help you grow? Have you identified those key leaders, those key clinical directors that are going to help you get there? If you can package all those things together, you put yourself at the front of the line for what the buyers are looking for.

Carter Schelling
Well said. You know, that just proves out our mantra, which is drive able to up, drive, risk down and light up the future. That was that was terrific. Are there even cases where there's things that buyers in general want? But in the process of preparing a company, the M&A team realizes there's a small set of buyers that really would be most interested. And those buyers have specific strategies that suggest that if we can build our strengths to match those strategies. You know, one of the things that happens is two different companies with the same EBIDTA sometimes one gets more money. How can that be? Well, because of the little subtle factors like does the strength of the seller match the strength and the strategy of the buyer? When we have 20 buyers and they're not all the same, they have different strategies for growth. Does that ever come up in the development of their strengths and weaknesses?

Dave Pierce
It absolutely does. It does, you know, because it may be based on on region or geographic demographics, all those different things of who those likely buyers might be for that area. And not only in their growth plans, but also just in the structure of their deals in general, because that can can weigh in heavily to how we prepare that company. If we know that a buyer has a certain structure that they like to pursue as far as a deal term, as well as what that growth looks like or how to best match your company, you know, leading into a sales event with what those buyers are looking for. You put yourself at the front of the line and that's our aim is to always, you know, go out into an open market where we knowing the buyers very well, get you to the front of the line for your region because that's going to drive the best possible deal valuation and term for for that seller.

Carter Schelling
Got it. Yeah. So what kinds of numbers can you turn in terms of the improvement of the performance and how long does it typically take?

Dave Pierce
Yeah, I got another great question. I think that there's definitely a variance to this. You know, some have an easier pathway than others. We believe that, you know, a lot of the market and health care proprietary tools can can be implemented to really help speed up this process. And when when sellers fully commit to the process, they can make drastic gains in as little as three and six months and really show a prospective buyer a turnaround with that kind of focus and that kind of attention. So I would say, you know, our normal, normal M&A process ranges anywhere from, you know, this proprietary process ranges anywhere from, you know, 1 to 2 months with companies that are that are clipping along and either highly profitable or they just feel like they're ready. And we agree with that. But it can be as long as probably six and 12 months in some instances, if we're really trying to make some drastic improvements before going to the marketplace.

Carter Schelling
Got it. So if somebody is thinking about this, but they're not sure they need to get more information, is there is there a preliminary step they can take? But I mean, is an aside in assessment a place to start and tell them? Tell us again, like what happens there really briefly?

Dave Pierce
Yeah, it really is the best place to start. And it's where we start. All of our clients. You know, because it's a it's a very compelling set of data that we're able to sit down and review with that seller client that shows them that snapshot in time currently of where they stand. You know, it's it's basically kind of a tell the truth moment from the buyer's perspective in my mind of a lot of sellers come to us with different thoughts or things that they've been told about valuations or what's happening in the marketplace and our outside assessment. Is that true snapshot to show them? Here's exactly where you stand, here's what's happening in the marketplace, and then it leads to that next discussion of where do we go from here? And that might be goes straight to M&A for most clients, there's going to be a preparatory phase of really trying to optimize all those strengths, reduce those weaknesses so that we can find them the best possible deal when it is time to go to the market.

Carter Schelling
Got it. And so the whole asset analysis that start to finish that, how is that how long does that process take?

Dave Pierce
Yeah, it's typically relatively quick. We obviously request and rely on a fair amount of data from the clients. So as long as the client can get us that data, our turnaround is usually one or two weeks on that data. And then we we start that process with about a typically a 3 to 4 hour PowerPoint presentation and walking the client through all that. And then that's going to lead into some more discussions of next steps and the different tools that we can come alongside and offer that client.

Carter Schelling
Super great. This has been a terrific. Dave, anything else you want to add before we sign off?

Dave Pierce
No, I just think that, you know, there's a little bit of a new one that's entering into the marketplace that that we can put out there for all the practice owners that, you know, buyers are having, just as hard a time acquiring talent as as practice owners. And so one of the big things that the practice owners can be thinking about is how do I continue to acquire top talent? How do I retain top talent? Because the practices that are really good at that are going to continue to move to the front of the line. On the M&A side, right? Buyers are simply looking at acquisitions now for a lot of different reasons. But one of the current ones is it's a it's a way to acquire talent.

Carter Schelling
Right there and people.

Dave Pierce
Feel their growth. Yeah.

Carter Schelling
Great. Super. Well, I really appreciate your time today. It was very instructive. Thank you. So pretty impressive. If you'd like to have a conversation about how or if this could work for you, please put your name and email in down below and we'll reach out and set something up. I think it's worth your time to take a closer look, because right now, the competition for the best acquirers gets more powerful every day. You need to have the very best possible strengths and weaknesses to get the best possible deal. Thanks for your time today. I'll see you next week.