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What’s your exit strategy?
For single providers and small fertility practice owners, the difference between a multi-million dollar sale and walking away with nothing often comes down to timing and preparation.
This week on Inside Reproductive Health, I sit down with Bob Goodman, Richard Groberg, and Dr. Brijinder Minhas of MidCap Advisors to discuss:
The current state of fertility clinic mergers & acquisitions
Why many fertility MSOs are preparing to sell their networks
When it’s too late to maximize your practice’s value
How selling with a competitor could radically increase your exit price
The biggest risks that lower your practice’s valuation
If you think you might sell your practice in the next 10-15 years, now is the time to start planning. MidCap’s team works with clinic owners to increase their valuation and secure the best possible deal—and they don’t charge fees unless you get paid.
Don’t leave money on the table. Listen now to learn how to secure your financial future.
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Brijinder S Minhas (00:00)
In our field, in the fertility world, outcomes, clinical outcomes are extremely important. You know, no network, no buyer wants to take on a practice that has substandard outcomes. And so we look at that very carefully. We look at
Personnel costs, know, personnel costs are one of the biggest costs in a practice. We look at that. Marketing costs, you know, is the marketing effective? are you getting a payback on your Are you doing enough marketing? Are you doing too much? So all of these things feed into the equation and that's, you know,
Richard Groberg (00:29)
may not be doing enough.
Robert Goodman (00:32)
Yeah.
Brijinder S Minhas (00:37)
that all feeds into our assessment. And we do all of that prior to being engaged by the client.
Griffin Jones (00:54)
Make a couple million dollars or close up shop with nothing. That can be the stakes for single providers or small practices. For some, it might simply be too late. For others, my guests point out what you might do as a small fertility practice owner or single provider to prepare for a much better financial picture with far more and far better options during the last decade of your career.
It's Bob Goodman, Richard Groberg and Dr. Briginder Minhas. Bob was a health system operator. Richard was the chief development officer of Clinic Network and Briginder was an embryology lab director and fertility practice owner among many other things for all of them. Today, all three of them work for MidCap Advisors. Richard is a recent addition, though he's done a lot of deals in the fertility space on both sides. They give us an update on the fertility mergers and acquisitions market and
what the fertility clinic MSOs are doing. Did you know right now many of them are preparing to sell their networks? So they share with us what they're doing to prepare. But we tailor this conversation to the small practice owner, the single provider. We talk about when it's too late for a practice owner looking to sell, when they need to start preparing to have a successful exit, how they might be able to radically improve their sale value by going to market with one of their competitors.
how MidCap has done that multiple times and how they help competitors get their financial house in order and come together before a sell. Other factors that buyers of clinics perceive as risks that decrease the value of your practice.
If you think you might sell your practice in even the next 10 years, even next 15 years, talk to any or all three of these gentlemen. There's no risk to you. Midcap doesn't charge any fees unless you have a payday. Take advantage of their knowledge. They are very patient, very knowledgeable, very consultative because they know it's a long-term relationship. They know all this takes time. Connect with any of them through our channels. We'll have different links.
tell them you heard them on Inside Reproductive Health, or just ask me and I'll make a warm introduction for you. Whatever you do, don't put it off until it's too late. You worked hard to build a practice. Don't walk away with nothing, or don't walk away with hundreds of thousands of dollars or millions of dollars less than what you could have walked away with. The earlier you take some of these actions, the much greater return, so get in touch with MidCap.
and enjoy the conversation with Robert Goodman, Richard Groberg, and Brijinder Minhas.
Griffin Jones (03:43)
Dr. Minhas, Mr. Groberg, Mr. Goodman, Brijinder, Richard, Bob, welcome back to the Inside Reproductive Health Podcast.
Brijinder S Minhas (03:51)
Thank you.
Richard Groberg (03:51)
Good morning.
Griffin Jones (03:52)
Richard,
what's happening in the fertility marketplace with regards to mergers, acquisitions, deals? How does it look in the broader context of the market? How does it look and feel compared to how it may have two or three years ago?
Robert Goodman (03:53)
That's good.
Richard Groberg (04:06)
Well, there's still significant investor interest in backing what we call the PE back groups. It's still a well-regarded area. Having said that, a number of the PE back groups seem to be positioning for sale or trade at some point this year or perhaps next year. Between that factor and
Thoughts about recession and interest rates are still high. There's less &A activity than there was two years ago, but there's still selective groups that are very interested in strategic acquisitions, whether it fits within their existing network or it's an area that they want to be in.
So that still remains fine. I will say that over time, as these PE back groups either merge or trade, whoever's buying them is probably not buying them to own a static business, but to buy a business that will grow. So at some point, the growth surge of &A activity will revive again to where it was two and three years ago.
Griffin Jones (05:06)
For those that are still selling, there might be less activity, but for those practices that are still being bought, are they going at similar multiples to where they were two or three years ago or have we seen a drop?
Richard Groberg (05:20)
Back in late 22 and 23, multiples started to come back to reality. This past year for acquisitions that made sense for the buyer. In multi-doctor practices, multiples started to move back up a little bit when it made strategic sense. And since there were fewer multi-doctor practices out there anymore, the laws of supplies and demand were such that
They started to trade back at premiums, not where they were in 22 and late 21, but still started to trade back up again.
Griffin Jones (05:54)
For those network groups that may be going to sell, do you think you'll see them merge with each other and some will sell to each other? Or do you think that it'll simply be their private equity partners selling to some other private equity group that might not be in the space yet?
Richard Groberg (06:12)
Well, if we look at the trends over the last couple of years, most of the major transactions were one group merging with another, often backed by new PE money. So I think we'll see both. The largest PE firms in the world are still looking at the fertility market, but they're also trying to rationalize where's the growth with the changing environment of fertility with more third party payers, lower reimbursement rates and more mandates.
So I think we'll see a combination of both. But when, for example, when two groups merge, their economies of scale at the macro level of those groups. So we'll still see some of that.
Griffin Jones (06:54)
Are we waiting to see who goes first? Is that why we haven't seen a lot of too many of these networks sell yet, or at least those that have been trying to sell for a couple years? Is the marketplace trying to see who goes first and sets the stage for the multiple? What's happening there?
Richard Groberg (07:11)
I think there's some of that and I think with some deals that didn't happen last year, some of the groups are, okay, let's focus on improving performance, tightening up the ship, much like MidCap does when it's working with its clients so that when the market does start to open up again with the first transaction happening, other groups then are likely to follow.
Yeah, I think that.
Griffin Jones (07:37)
Bob and Briginder, what's going on with single physician REI practices? Are they straight out of luck?
Robert Goodman (07:43)
I'll take that. No, they're not straight out of luck at all. Although there are some limited opportunities in some respects, when you look at the practices, you know, if it's someone who's 65 or 68 years old that says, maybe now I should do something, that's a little problematic. If you've got a relatively young or young REI, a single
practitioner and a practice, but he or she is interested in growth, looking at new opportunities. I think then we've got somebody to work with, not on an individual basis, but to look to combine them with some others who are in the same general geographic area that are of like mind. And I think that's where we have opportunity to kind of virtually bring them together and then take them to market together.
One of the things that we do at MidCap when we look at combining practices is that we look for economies of scale. We look for their opportunities to reduce lab costs, reduce staffing. And just as importantly to see if over time, if there's a way that we can improve reimbursement as well for them. So they're not out of luck, but you got to be very creative.
and they have to be a lot more open to ideas that maybe they weren't open to previously.
Richard Groberg (09:00)
If might add, I've worked on and seen a few transactions over the last couple of years, even where a PE back group has strategic reason for acquiring a practice, either because they have enough practices and physicians in reasonable area where they can provide the support for that practice, or they're merging it into an existing practice, closing down the smaller practices lab and providing significant economies of scale to both the seller
and the buyer in terms of both economics and work-life balance.
Griffin Jones (09:34)
Is that pretty much their only option? If they don't go in that route, are they pretty much looking at hoping for luck and having a younger doc come in and buy them out or just closing up and getting nothing? Is that pretty much the alternative if they don't... If they're either not a strategic choice for a network or going to market with another group close to their area?
Brijinder S Minhas (09:55)
Well, you know, it's been a bit of a mindset as well. And I think it's imperative that the single doc practices out there start thinking creatively, start thinking earlier on. I was just thinking about it a minute ago.
If you're in a marketplace, you've been competitors all your lives. There comes a point when you start thinking of an exit or start thinking of a sale that it would behoove you to improve your relations with your colleagues in the marketplace. mean, even CAP, during a lab inspection, one of the questions is,
Do you have a backup for your lab? So this is not just a backup for a lab, this is a backup for the practice. So I think start thinking about improving your relationships with your colleagues in your areas and start opening dialogue and start thinking about economies of scale. How can you come together? Where can you save? How can you improve the EBITDA?
Richard Groberg (11:09)
Yeah, mean, Griffin, we're working on a couple of situations at MidCap with a physician who might be five years or seven years from retirement, but a one physician practice. And if he or she doesn't find an alternative, her practice has no value at exit. But if that physician is willing to partner with an existing competitor, then...
In addition to the economy's scale, in addition to the better productivity and work-life balance, instead of being worth zero, that physician is part of a combined business that's now more profitable and gets the multiple of a healthy multi-doctor practice at exit. So can be a tremendous win-win across the board if the physicians are open. We've seen this in other industries as well, where competitors suddenly join together.
and then have a much better situation professionally and financially.
Robert Goodman (12:08)
Yeah, we've also seen the other side of it. Where there's markets where the doctors have competed against each other fiercely throughout the years and have, you know, it becomes very personal sometimes. And in some cases, especially if they're, I'd say, especially if they're a little bit older, because it's gone on for much longer. It's impossible to sometimes to crack through those old issues.
and to have them see sort of the light that could be attained for them. so, you know, they're going to, it's not going to work for them. you know, where there's an opportunity to create a wealth strategy for themselves as a result of selling their practice, that's just, it's not going to happen. So we try as hard as we can to make them
see the light, but it doesn't always work.
Brijinder S Minhas (13:00)
But with age comes wisdom as well. When you're looking at the end goal, if you can see that your competitor has a bigger lab or a better lab, we've got to realize that most of the cost is in the lab. Closing down one lab and functioning out of the larger lab
Richard Groberg (13:03)
Let's hope.
Brijinder S Minhas (13:27)
would be better in terms of outcomes, clinical outcomes. That's why the patients come to us, is to have a baby. And secondly, it also positions both practices to exit and get a much better multiple and a much better transaction value.
Griffin Jones (13:47)
Are you recommending that they merge together and become one business or can they go to market together without having merged?
Robert Goodman (13:57)
We tend to try to bring them together virtually for a variety of reasons, not the least of which is the cost. If we can virtually market them to one of the platforms or someone else for that matter, they will go through a merger and the cost of expense for that, the legal expenses and that sort of thing, but they'll do it in effect once and not twice. And so there's some economy.
in that regard.
Richard Groberg (14:24)
I mean, there's a balancing act there, Griffin. If I'm a buyer and you're merging simultaneously with the transaction, then you don't know whether the cultural fit that Robert talked about will make sense and all the economies to scale are pro forma. Now, you might be able to overcome that. Whereas if they've merged and they've been working together for three months or six months, then you actually have demonstrable proof that it's working.
and it's easier to then market to an acquirer.
Griffin Jones (14:53)
How do you get them to get their act together to portray this possibility to a buyer? I'm picturing the three of you guys sitting two people down and saying, no, you're going to sit down and you're going to like each other and you're to be on your best freaking behavior when these people come to meet with you. How do you do that?
Richard Groberg (15:12)
even in a fertility practice where physicians have been practicing together for a while, they don't necessarily all get along or do things the same way. But the advantage we have is we've got lot of gray-haired people who've got a lot of experience with &A, and Briginda and I who've actually worked in fertility practices, sold fertility practices from both sides of the table.
So we bring an insider's perspective to what needs to get done and what the pitfalls are and the landscape and what it means if you do it right. So it takes some hand holding and yes, it takes some proper counseling. But again, we've got some gray hairs who've been there and done that.
Robert Goodman (15:54)
Yeah,
and my experience has less been in the fertility space in terms of being an owner and a buyer or a seller, but I've done it in other healthcare sectors throughout the years. And in many respects, it's no different. Obviously, specifics of how does a fertility practice operate versus diagnostic imaging center or a FCT business or whatever it might be, those are obviously those.
but the dynamics of selling and the purpose behind them and everything else, all of that is largely the same.
Richard Groberg (16:26)
especially when you're dealing with positions.
Brijinder S Minhas (16:29)
When our team goes in, know, we can look at it with a fresh pair of eyes. And just because you've been doing something for the past 20 years in a particular way, there are other ways to do it. And if the clinicians and the practice owners are agreeable to that,
We can show them ways that eventually will help them, will improve their outcomes, and will set them on track for a good, nice transaction.
Griffin Jones (17:04)
Tell me about how you do that specifically. How do you bring two competitors, or people who had historically been competitors, together virtually, as you say, how do you do that specifically before you bring them to potential buyers?
Richard Groberg (17:04)
And also frankly,
Robert Goodman (17:17)
Well, we run what we call process. And so what we do is we asked for a lot of data, financial data mostly, but staffing data and whatever. And so we look at that, we ask for that data using NDA and everything else, we'll say with it from both of the practices, as as we use this too. so as we get to understand the...
dynamics, the financial dynamics and everything else associated with a given practice and we do it simultaneously with another one, that's when we can begin to say, hey, let's look at this. Maybe here are some economies, here are some things that we can do, some adjustments we can make in this practice in and of itself and the same thing in this practice. But boy, if we can put these together and as Brijinder has mentioned, as has Richard,
that we shut down a lab in one of them and that sort of thing. That's when we begin to sort of mold everything together. And at the same time, we try to be, not try to be, we are, we're open with both groups and they have NDAs between themselves as well. And so, everybody likes to hold things for as long as they can in terms of disclosure. so we are sensitive to that and we allow for that in the process.
up until a certain point in which we have to say, guys, we need to share certain things among you. And so we kind of try and do it that way.
Richard Groberg (18:45)
It's a little bit easier though, Griffin, because...
Brijinder S Minhas (18:45)
And we don't want folks
to get the idea that the only way to do this, get two groups together is to shut down the lab. No, not at all. It may be that they are miles apart in terms of just travel distances and it's sharing of staff, sharing of responsibilities. And you know.
the age-old saying, you you can't always control your revenue, but you can always control your expenses. So bringing your expenses down improves the financial picture for the combined entity. And that's what I think we can bring to the table very easily and very quickly and effectively.
Robert Goodman (19:29)
Yeah.
Richard Groberg (19:30)
when you put two practices together like that, you're no longer going to market with a one physician practice. You have multiple physicians, so you've taken away, relieved the biggest risk for a buyer of acquiring a one physician practice. I just want to make one more comment, Robert, sorry. Is that Griffin, when two groups are actually in this discussion with us, it's because they're thinking about selling.
Robert Goodman (19:47)
See you.
Richard Groberg (19:55)
So there's a predisposition that opens them up to possibilities that they wouldn't otherwise think of because they're thinking about selling and understand that as a one physician practice, they don't have a lot of options.
Griffin Jones (20:07)
Brijinder you talked about reducing expenditures. And I'm wondering if there are expenditures that are more common among single doc groups or they tend to maybe waste money or have to spend more money on certain things. Richard, I'm thinking of one of the first interviews I did with you and you talked about how business owners often they'll put this expense that's really more of a personal expense on the business and that vacation that's a business trip, they'll put...
and it shows up as an expense and that can affect their multiple because of how it looks with their EBITDA. Is that more common? Are there other expenditures that are more common among single-dot groups?
Richard Groberg (20:45)
Well, that's the case with most practices of any size and part of MidCap or any other investment banking group working with them. The QV analysis will figure out what those are, add those back to show true profitability. you take a one, I'll give you an example. There was a one doctor practice that I worked with a couple of years ago that was potentially merging into a multi-doctor practice. This one doctor practice was generating a million and a half dollars a year.
of revenues, of collections, but not profitable between their lab costs, their staff costs, their marketing, insurance, all the overhead, apart from those personal expenses. And if that practice had successfully merged into the other practice and generated the same volume, it would have probably generated half a million dollars a year of profit to the combined group because
To pick up another 100 or 200 cycles, you don't need significant incremental front desk staff, nursing staff, lab staff. You might need a little bit of incremental. You combine marketing. You don't need more insurance. So all those expenses that are duplicative get saved when you're putting two groups together into one.
Griffin Jones (22:02)
Are there times where you all have to have hard conversations with people because especially if they've been competitors for a long time, they're probably thinking, my group is definitely way more valuable than this guy's. And then you get into things and is it sometimes the case that even though they might be the similar size that one group just has a lot more?
economic value than the other and you have to have hard conversations with folks.
Richard Groberg (22:31)
I think the better question is when do you not have to do that if you've got two competitors merging? Of course.
Brijinder S Minhas (22:33)
Yeah.
Robert Goodman (22:37)
Yeah, yeah, I mean, there is a formula. You you've mentioned EBITDA a few minutes ago. And so what we try to do in terms of valuing things is say, look, combined, you guys generate $2 million in EBITDA, but a million and half of it comes from this group and a half of a million comes from this group. And that's how things are going to be split. As odd as that sounds in terms of
of that seems pretty straightforward in terms of value. That's still a difficult conversation.
Richard Groberg (23:08)
yeah, might, again, a one doctor practice that's not making much money still thinks it's worth.
Robert Goodman (23:15)
Right. A whole lot more.
Richard Groberg (23:16)
much
more than the economics. And there are some creative ways to structure. They've got a surgery center that can be sold to a third party, non-related to the business, selling off equipment, what happens to their AR. So there's a lot of creative financial engineering that we help with.
Griffin Jones (23:34)
We're talking about single doc groups, can we kind of put like two doctor groups? Are they generally in the same bucket, especially if both the docs are older? Are they often in this situation? And I can think of a situation where it was a two, maybe a three doctor group and was going to sell and there was a younger doc who was an associate and one of the partners was saying,
I don't know if we can continue with this doc. I think we might have to part ways. And I was saying, try to avoid that at all costs because that's probably gonna be the tune of a lot of money for you with regard to multiple. Is that the case? And what advice would you have for those that are maybe two docs or maybe they've gotten associate, but we're not sure if this is working out.
Do they need to make it work out?
Robert Goodman (24:21)
I'd say for the most part, yeah, they probably do because one of the biggest concerns I think that any of the buyers have is who's going to take over this practice in two years or three years or whatever. And we've got to transition it over even before that. And if you bring to the table somebody, you the seller, bring that person to the table, that adds value. And I think you said that before yourself. And if you don't have that...
It's not a showstopper. It just makes the transaction that much harder at the end of the day because they have the recruitment is is you know becomes a big factor and as you know as we all know, know the number of REIs that are available is somewhat limited and despite the fact that OBGYNs or GYNs are are coming into the mix and providing certain services you know, they're not they're not they're not REIs and and
You know, they add value up to a point and some add value fully, but they're still not necessarily board certified REIs, most folks.
Richard Groberg (25:21)
Yeah, I can
tell you from two doctor practices to four doctor practices from when I was selling practices to having recently been on the buy side. If you're not, if the transaction itself is not taking care of and locking in the younger physicians, the buyers either are going to pay a lower valuation because they're going to take care of the lower physicians or require you to. And I've seen a lot of transactions recently where
The sellers, the buyers have required the seller to give some of the rollover equity or bonuses to the younger physicians, vesting over time to lock them in. Again, otherwise, you're buying something where your principal asset is getting ready to retire and leave after cashing out. So it's important to be able to have, lock in the next generation of leadership.
Griffin Jones (26:10)
Bridginder, what's the timing that doctors should begin to think about this? you'd said a bit further out, think people often think, well, I'm not gonna retire soon. But to them, they think, I'm not gonna retire within two years. And so therefore, I don't need to think about it. But it's further out that they need to start thinking about this, isn't it?
Brijinder S Minhas (26:34)
I would say if the thought process is that you want to retire between 65 and 70, you should start this process of start talking to folks or get your house in gear. I'd say start at 55.
Griffin Jones (26:51)
That's a lot of time in advance. Why so much time?
Brijinder S Minhas (26:54)
because it takes time. It takes time to get your mind hewn into the whole concept of, know, suddenly I'm gonna be working with other people. I'm gonna have to be more mindful of colleagues. I'm not gonna be calling all the shots. And if you've been doing that all your life, it takes time to...
get that mindset ready. you know, even in a situation where we've got the physicians have a reasonably long runway, the buyers want five-year contracts, you know.
And if the contract is any less, like it's three years, the valuation goes down.
So are there others?
Griffin Jones (27:41)
How do
people react to this idea when you talk to them about it? You've worked with a lot of different fertility doctors in big markets and maybe they're a single-doc group, but there's a couple other single-doc groups in that market. When you talk to them about the idea of, maybe we should also try to find someone else for you to go to market with.
Are they familiar with this idea typically? Have they thought about it in depth typically by the time you've talked to them? Or are you dropping a bomb on them that they've hardly considered?
Brijinder S Minhas (28:12)
It works both ways, but I think it's, we've all three of us have been having conversations and in fact, Scott as well, conversations in the field. And slowly, I think it's really, it's catching on. It's not that much of a bombshell. I think folks are coming to the realization that this is probably one of the best ways.
that they are gonna achieve their goal.
Robert Goodman (28:39)
Yeah, we've been for the last few years doing email blasts pre-ASRM, even pre-MRSI and especially in the ones pre-ASRM. We try and talk about different topics and we always talk about one of them, the single doc practices and the things to look for and the things to think about. And so we've been trying to plant that
seed, others too, not certainly up to us. And so I think to Brijinder's point, we try and get that out there. And even in the podcast, Griffin, that you did with Brijinder and I last year, we had some discussion about this as well. So we really try and point this stuff out as early as possible that they should consider these combinations as well as
other physician recruitment for themselves as early as possible. It's daunting to consider a single doc practice hiring another REI. It's very expensive and they don't typically have the resources to do it. And so that's, we try to soften the blow by at least having, hopefully having these people read about it and think about it.
Richard Groberg (29:45)
The closer they are to retirement, Griffin, or the closer they are to thinking about retirement, the more receptive they become to this idea. And I've seen this in other areas of healthcare, because if you're 10 years from retirement, the thought of partnering with your competitor isn't attractive. But if you're thinking about it and it's getting closer to reality, and you see that you've got no alternative, other than perhaps bringing in a
a junior partner who's going to cost you money upfront and wants their equity for next to nothing, they become more more receptive to the concept because there are fewer alternative scenarios.
Robert Goodman (30:20)
Right,
because the alternative, if they don't do any of those things, is close up shop and, you know, sell somebody your chart or something like that. And, you you'll get $14 and that's about it.
Griffin Jones (30:34)
Yeah, that was going to be my question, Bob. Do you meet with people sometimes and you're just like, I'm sorry, it's too late. I can't help you. Does that ever happen?
Robert Goodman (30:44)
It's happened to me even prior to coming to MidCap. I spent some time working in the dental roll-up space and I definitely found it there where there were single dentist practices out of their homes, that sort of thing. We've all seen those and maybe we've even gone to those kinds of docs. And they're 65, 68 years old and it's like,
Okay, I'm ready to go. Now what do I do? The ship has sailed.
Griffin Jones (31:16)
Yeah. Donate your equipment
to a medical brigade going down to South America. That's pretty much what you can do at this point. How far apart can clinics be and still do this strategy? Like, do they have to be within 50 miles of each other? Can a clinic in Cleveland do this with a clinic in Detroit or do they have to be much closer typically?
Robert Goodman (31:21)
Yeah.
Richard Groberg (31:38)
geography is different if you live in New York City or LA or Chicago. Ten miles is a lifetime. But in other areas where, again, I've seen situations like Brijinder mentioned before, where they're far enough away that the labs make sense to stay open. But if one practice has three physicians and it's an hour, an hour and a half drive,
Brijinder S Minhas (31:49)
Yeah
Richard Groberg (32:07)
then you suddenly have physician support so that a one doctor practice, he or she can take a vacation. If they've got a big batch, they've got help with it. And there are some economies of scale. So every situation is unique. And sometimes it makes sense to merge them. And sometimes there are enough economies to scale without merging and closing facilities that it still works.
Griffin Jones (32:33)
You guys, MidCap has a reputation for being very helpful. From my experience, you all are very patient. Sometimes I feel like too patient. I want to come in and tell them like, wrap this up, move stuff along. But you all have this reputation for coming in and helping people even if they're not quite sure if they're going to sell. they're thinking, well, maybe we'll think about it in a year or two. You all have this sort of MO about earning the business and just
building relationships. And so I've seen it where you all have come in and helped people with different things, even though they might not be engaged with you or they might not be selling their practice right now. Why do you do that?
Robert Goodman (33:16)
Well, I've been at MidCap the longest, so maybe I can answer that a little bit. It's a little bit of the philosophy within MidCap to do that. The healthcare vertical within MidCap is just one of the verticals. And MidCap's been around a lot longer than the healthcare vertical. And so I think some of it comes out of the philosophy of the original founders.
And some of it, I think, comes out of our other managing director who's been there longer than I have, Scott Yoder. Obviously, know you know him and hopefully the audience that is listening to this knows Scott as well. So it comes out of him as well. And I think it's done him well during his years as a banker. I think
I think it's the right way to go because selling your practice is like selling your child. And so it's a very emotional sort of thing. I mean, there a lot of people that are definitely dollars and cents focused and that's it. But people in the fertility space are way more emotional about things, I'd say, than some others, some other areas.
Brijinder S Minhas (34:09)
Very emotional.
Robert Goodman (34:25)
So it just takes time for people to get to really get comfortable with the idea of doing this. now that being said, do we try and push hard at different times? Of course we do. Because it's sooner or later, you know, we want to get a transaction done and we want to be compensated because the approach that we take is that we only get paid when a deal closes. And so
We try to make sure that the folks that we connect with are of the right mindset. They have the business quality as well as the financial quality that will ultimately yield a good result for us. But we've got to push them along sometimes. But it does take time. And I think people do appreciate that.
Richard Groberg (35:08)
There's another reason why it's important to build a relationship. Selling a healthcare practice is not like you sell your home and the day it closes, you move out. Okay. In this case, when you sell a healthcare practice, in most cases, the next morning, you wake up and go back to work. But now you're not the landlord who owns your practice. You have a partner that paid a lot of money to buy your practice. There are some things that are going to change.
and you have to coexist. So it's not just the dollars and cents of the deal. It's also finding the right partner and the working relationship and subtleties in the terms. And I've talked about this in some of my past podcasts with you and the fact that we've got people with significant healthcare experience and Bridginder and I have been in the industry, having those relationships formed over time helps.
work the sellers through this very complicated once in a lifetime process that's not just I'm selling my house and I'm moving out tomorrow and I never have to deal with this again.
Griffin Jones (36:12)
What do you do when you come in and your incentives, your interests are very aligned with the practice owner because you're not taking some sort of retainer engagement upfront, you're being paid when they get paid. So it's in your interest to make sure that they have a healthy business. What are you doing in those times before they're ready to sell to get them prepared for whatever option they might choose in the future?
Brijinder S Minhas (36:40)
It really depends on the individual situation, know, the needs of the of the practice. I mean, we we look at it with multiple eyes and we look at every aspect of the practice. We get a lot of data, a lot of data, financial data, clinical data, and then come up with a a so-called composite picture, a composite evaluation.
And sometimes, and we've experienced this, the time is not right, you know. All three of us have seen it where we say, well, I think you need to wait six months or wait a year, or this needs to be fixed, or this needs to be fixed, this needs to be fixed to be in a much better situation.
Robert Goodman (37:28)
And sometimes those same people, Brijinder's referring to, they have, they've already set some plans in motion for growth. And so we encourage them to continue those activities and let's see how that growth plays out. Cause if it does play out in the way that they think it plays out, that just puts them in a better position, puts us in a better position to help them as well.
Richard Groberg (37:50)
Yeah, and Griffin, if you go back to my selling a house analogy, before practice actually goes to market, that significant work we do is like, again, when you're selling a house, you don't just put it on the market. Someone comes in and sees where there are nicks or cracks or things that need to be cleaned up or touched up or improved or or, you know, something we need to wait six months until the market's better in order to do something. But.
Unlike some of the other groups in the industry that represent sellers, we actually have experience in the industry. You can roll up our sleeves and work with those practices to position them at the right time and with the right, again, cleanup and modifications and posturing.
Robert Goodman (38:34)
Yeah, and I've been talking at various conferences over the years on behalf of MidCap and always talking about getting your house in order. And typically we are using it, selling your house as an example. In some cases, it's, you know, changing out furniture or bringing the landscaper in to make some changes outside, you know, or whatever it might be. But some of it's cosmetic and a lot of it's not. Richard talked about things that are not cosmetic.
although maybe a little bit, but some of it's not cosmic. Some of it's like, you should get that radon test done maybe beforehand or something like that to see if you've got a problem.
Griffin Jones (39:11)
What specific advice would each of you give to practice owners?
Richard Groberg (39:17)
Every situation is unique. It's just like a fertility doctor can't prescribe the treatment for a patient without blood tests and lab tests and consultation and a diagnosis. And that's part of what we do is we've got to diagnose the practice. then those specific recommendations are custom designed and tailored.
by analyzing each practice discussion with the owners and our understanding of the markets and who potential buyers are and what they're looking for.
Robert Goodman (39:46)
Right.
If you've seen one practice, you've seen one practice. They're not all the same. There's obviously a lot of similarity. so and we all draw from our experiences and whether they're from the fertility space or working with dentists and ophthalmologists and others where I've dealt with from time to time in the past or surgery centers, whatever it might be. There are so many things that you can draw from and try to work with these folks on.
And we have the credibility, we have the experience. I've been involved with four businesses and have successfully sold at least two of them. And I mean, personally. So, we've been there, we've been C-suite guys and in large healthcare businesses and other places. So, we think we have credibility and yeah, gray hair goes along with it.
Brijinder S Minhas (40:37)
One, two.
Just a couple of points, know, Griffin, you ask a very important question. In our field, in the fertility world, outcomes, clinical outcomes are extremely important. You know, no network, no buyer wants to take on a practice that has substandard outcomes. And so we look at that very carefully. We look at
Personnel costs, know, personnel costs are one of the biggest costs in a practice. We look at that. Marketing costs, you know, is the marketing effective? Is it, are you getting a payback on your marketing? Are you doing enough marketing? Are you doing too much? So all of these things feed into the equation and that's, you know,
Richard Groberg (41:18)
Or are you doing enough? They may not be doing enough.
Robert Goodman (41:23)
Yeah.
Brijinder S Minhas (41:27)
that all feeds into our assessment. And we do all of that prior to being engaged by the client.
Robert Goodman (41:35)
Yeah, and
you know, we've had a lot of experience with a lot of practices. And now with Richard on board, I know we're going to be able to home this even more. And although we don't try to always talk about this, you know, we have a body of data that says this is what we typically see as the percentage of revenues that you're spending on marketing. And we see some people spend way above that. We see some people.
spend way below that. I'm just using that as one example. And so, you know, we try to understand what they're trying to accomplish with whatever it is they're doing and say to them, how is it working and how are you judging whether it's working or not? In some cases, we find that, oh, yeah, we do all this stuff and blah, blah. But so, and how do you track it? Oh, I don't think we do track it. So there's a lot of things that we try to help them with.
Griffin Jones (42:30)
I hope that people take advantage of this and get in touch with you. I hope they do so before it's too late. I hope they do so as they're starting to think about things and not further down the line when you could have helped them even more. We'll be putting your different ways of being able to contact you in different places and people can always ask me for an introduction. But I consider myself to be someone that's pretty middle of the road.
pleasantly persistent when it comes to sales. You all are so much more laid back than I am. And so you're all easy to talk to. Anybody that I've introduced you to has been happy that they've had a chance to talk to you. And it's just an easy, very, very low risk. I hope that some people take advantage of you. A lot of people already have.
And I look forward to having all three of you back on the inside reproductive health podcast. Thanks for coming on gentlemen
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