Step Out – Reach Out – Network: The Real Life Formula For Nathan Shields And Sean Miller with Stephen Rapposelli

This week, Stephen Rapposelli , PT hijacks the show and turns the tables on the host! Stephen noted early on in his conversations with Nathan Shields that he hasn’t shared enough of his ownership journey with the audience, thus he pushed to take over the podcast and ask Nathan and Sean Miller exactly how they went from individual clinic owners to selling their clinics to Empower PT last year. Stephen asks some specific questions about the how’s, why’s, and what’s that. Hopefully, in this episode, Stephen fills in some gaps and give you a little insight into the PT clinic sale experience. Sean shared all of his wisdom as well to add some great insight into the cycle of PT clinic ownership.

—

This is  Steve   Rapposelli .  I’m a  fellow PT owner and I have hijacked Nathan’s show  because we have turned the tables on Nathan. Nathan needs to have the tables turned on him, so he does not know what I’m about to ask him, but he re’s a little bit of background. Nathan  was nice enough  to interview me for his show .  You may or may not have rea d it. That’s not important, but as I was talking with Nathan and as he was interviewing me in a very inqu isitive, friendly way, I found out that he  would not be the guy  to say that to you directly.  I’m taking it on myself  to be the interviewer and to ask Nathan a l ittle bit about his story because qui te frankly,  it’s fascinating.  It is a story that  you are going to want to hear  as a fellow PT  owner . T his is why  I  think  it’s important.   

If you’re a PT  owner like myself, whether you have one clinic or five clinics or  100  clinics, you probably have the same questions in your mind that he did and that I do and that is where are we going here with all of it?   What is the next  step for me as an owner?  Nathan has already walked that path and the story that we’re about to reveal is going t o be one that you’re going to find entertaining, learn a lot  from  and help you on your journey. Y ou may likely take a differe nt journey than Nathan’s  and that’s okay. Nathan has his own path, but it will help  guide us as a way of comparing and  contrastin g where you may need to be. W ithout further ado, I’d like to introduce Mr.  Nathan Shields . Nathan, are you there?  

T hanks for having me,  Steve . I appreciate you having me come on my own  show .  

W e are glad to have you on your own  show  and I want to get right  down into the end of the nitty-gritty.  I know that y our story is searchable  in the wonderful digital land of Google, but we need to  have it  lying  in your own  show  archives because  it’s very interesting and it’s very instructive to your  audience. W ith  that said, you’re a guy who  got his training  N orthern Arizona and upon graduating back in the lat e ‘90s,  you opened up a practice in  the Phoenix area.  T ell me about the path that you took when you first opened your office in Phoenix.  

I opened up my clinic in 2002 and that was in Chandler, Arizo na. M y whole goal was to get to two physical therapists, 15 0 visits a week and afford a TiVo. I thought if I could get two PT s ,  150 visits a week  and  get a  TiVo , then I know I’ve ma de it and that would be all.  Lo and behold,  I  worked hard for  a number of years and I opened up a satellite office  in Florence.  I  got  a friend to manage that for me. T hat ende d up being my business partner,  Will Hum p h reys . H e  managed that. He  eventually bought that clinic from me.  T ogether,  we  open ed  up another clinic in Maricopa, Arizona.  W e ran like that for a number of years . E ach   having our own success, we had his and our situation, but we shared common consultants. W e k new that we needed help. W e shared  a similar networking group,   a  small business networking group.  We found out, like most of us do that,   “ I don ‘t know what I’m doing business- wise. I can treat pat ients all day long and they’re happy, they get results, but  I hate doing the business stuff. ”  

You said, “ We needed help. ”  How did you know that you needed help?  

If you read my interview with Will,  he knew he needed help because he had a breakdown.  He  had a stack of charts that he was go ing home with every night. H e was driving in the middle of the summer  in Arizona at 115 degrees  in a little truck that didn’t have  AC . He was sweating through h is clothes. For me,  I was the guy that was staying up all night doing charts.  I had  employees that were upset with me and upset with the company,  who  did n’t know who to talk to.  I was upset with them an d frustrated that they weren’t  simply doing what they were supposed to do, even though I didn’t tell them what they were supposed to do.  There were  a lot of frustrations and I knew there’s  got to be something better.  I also  knew that if I continued down this path of working 60 hours a week and then trying to run the business  on top of that,  there was going to be a burnout. I co uldn’t keep doing that. I t was at that point that we figured we needed some help.  

What help does a PT  owner  seek out when they reach that a- ha moment?  

They  can do a number of different things.  Y ou can start reading books. You can start  g oogling and looking up webinars and  YouTube channels of  other  PTs that have been successful. You can reach out to a podcast. Nowadays,  there are many more resources available to us at our fingertips as  PT  owners than there was back  then I believe. Even the A PTA has provided some good materials through PPS to help  someone get started in a clinic,  but there are many more consultants.  There are many more companies. T he  i nternet is mu ch more  available  so  you don’t have to feel as alone as I did back  then in the early 2000s, starting at the clinic.  There are  m any more resources now.    

M y mantra is to reach  out, step out and network. T hat’s the common formula for success that I’ve found in not only in my experience, but also the people that I’m interviewing. You got to stop treating  full- time. If you’re going to be a business owner, you’ve got to put it on your business owner hat a couple of days a week and act  as  the leader of your company and that you own a business. Forget that you’re a physical ther apist almost anymore because  more than a physical therapist or an owner, you’ve got to get some support,  some outside perspective. Y ou’ve got to network.  

Reach out, step out and network is a common formula for success.
Click To Tweet

Did you seek out a PT- specific coach consultant?  

We had a personal/business coach, someone who helped us  at different time s as a parenting coach. When I say us, that’s W ill and  myself.  W e found this person who was providing parenting seminars because  we were new parents as well. T hat’ll add to the stress.  She also did  some business consulting because a lot of  it’s about relationships, w hether it’s parenting or interpersonal relationships with the husband and wife or relationships that you have with your employees. It ‘s about relationships. S he  did some coaching with us,  but t hen we also reached out to a PT- specific consulting group,  Measurable Solutions   at the time and got some help in that regard as well to help us organize and establish structure and systems in our company.  

Are cutting-edge PT owner s ever done seeking coaching / consulting?  

If you’re me personally, I don’t believe so.  Consider  the professional athlete, they’re at the top of their g ame yet they still have coaches. I listened to  a  podcast   about  The Trillion Dollar Coach   or something like that, but  Steve  Jobs had a coach through most o f his existence as the CEO of Apple. It’s the s ame thing with the guys at Google.  They have coaches. T hey need another perspective. They need some insight. They need someone to hold them accountable if they’re going off the rails and not  heading towards their goals.  I believe that everyone needs a coach.  

In your opinion,  one consisten t behavior of success of the PT  owners that you ‘ve interviewed a nd interacted with is ongoing and regular coaching to help them grow personally and professionally .  

I believe so, y eah.  

That’s good to know. Here you are back in the early 2000s. You’re running and gunning with W ill, ever ything is going well. F or those of us who are not in  Arizona, I assume that  those cities that you identified are in that whole Phoenix Megalopolis area.  T ell me more of your mindse t at that time. Were you like, “I got the two PTs,  150 visits a week and the  TiVo.  N o w we have two other offices. L et’s  just  rinse, was h and repeat.” W here did you evolve from there and why?  

The  ultimate decision  is to get some consulting help.  I don’t know  how to put my finger on it. W e have another physic al therapist on here with us,   Sean Miller , who might’ve gotten t hrough the same experience. M y thinking a t that time is, “We can’t keep doing this.” W hen  I think  about what this is, i t’s that I’m treating full time.  I’m running my business. I don’t have a lot of time with my kids.  M aybe financially I’m doing all right, but I’m not able to enjoy it per se. I didn’t feel like I had  a lot of freedom.  I felt li ke I was a slave to the company. T he company didn’t work for me, which is the ideal situation. I knew I needed help at that time.  Y ou and I both know, everyone know s who’s reading this blog,  we haven’t had any  business training, so  I also didn’t know what I didn’t know.   I knew I needed some outside help to do that. Did I answer your question?  

T hat statement you made of,  “ I can’t keep doing this ,”  resonates with a lot of your  audience .  That’s a very  scary place to be because you’re leaving a comfort zone of you trea ting people  and making t he donuts so to speak. T o leave that to then work  on your business is  not an easy  transition for most clinicians/ owners.  

I believe  a  lot of us are high- achieving people. If we’ve gotten through physical therapy school, that’s a common trait for all of us and we are very comfortable in being good physical therapists.  L ooking at  it, if you were to say, “Y ou’re not going to do any physical therapy and you own a cl inic, what are you going to do?” M ost physical therapists might not know what  to do to lead their company. T hey might go over and pay some bills or they might go market some doctors, but what are they going to do to  achieve their company goals? T hat  might be hard for us to accept,  to set aside the physical therapy hat and put on a business owner’s hat, one that we haven’t been trained in. It can be  an  uncomfortable transition.  

O nce you had reached that point, Nathan, were you ready, willing and able to make  that transition? D id you still have to be dragged into it  by an outside person?  

T here was definitely some trepidation because if you get down to some numbers, you’re thinking , “I f I’m  not treating on the floor and  I hire someone else to take my place ,  I’m losing money at that point . T here’s a decrease in profit margin because I’m taking on the extra sal ary.”  I ’m no longer “ productive. ”  I can’t equate my time, which is time with a patient ,  to an out come of money. I t’s  hard to go from that to, “N ow I n eed to set up a marketing plan.” Y ou can’t make the immediate correlation betw een my time and the results  of that marketing plan.   

Y ou  went from considering yourself  productive to being one giant expense for your business.  

Yeah , t hat’s where it t ook a lot of mindset training. M aybe sp eak to this a little bit too, Sean, since you’re on here. If any of you  remember  Sean Miller , he’s one of my first episodes  on the  show  and  he went through some training as  well.   M aybe you  can share your experience, Sean, in the same way, but  I had to  go through that mindset training that, “ I’m not a physical therapist anymore. I’m a business owner who happens to provide physic al therapy sometimes.” It’s t o make that tr ansition, to recognize that  if I’m going to grow and make the company do what I want to do, I’ve got to work on the company  to make it do what I want to do. Simply providing more patient care isn’t going to get me  there. You  have to work yourself through that over and over again to wash that all out.  

I couldn ‘t agree with you more, Nathan. I  appreciate you guys having me on with you.  T hat was a huge mindset shift for me as well. You’re a  full- time c linician treating patients.  I remember working with a consultant and  the first thing he told me was, “Y ou need to block off five hours a week to work  on your business.”  I was like,  “ I can’t do that. There’s no way I can do that. ” When I did it though, I said, “ I’m going to trust this process. I hired this guy to help me for a reason a nd I’m going to do what he says. E ven if I ended up losing money, we’re going to do  it to see what happens.” As we all know, when you set aside that time and  you start working on your business, you are automatically starting to see results and all of a sudde n you realize, “T hat was a good idea. ” It is a mind shift  change because we’re not us ed to that aspect of thinking w e should block off time instead of being with our patients  

Sean,  you bring up a very good point. I want to hammer it again.  You  said something  that was key and that is  you brought in a consultant  who  told you what to do . T here are so many people out there who then will disregard that advice that they paid good money for.  Y ou happen ed  to take the advice that you paid somebody to tell you. How difficult was that?  

I was telling a lot of people in our company this story  and it was that  when I first started  with  this consultant and they were recommending all these things that I needed to do in  my business to improve it,  I wa s super skeptical. I was like, “No way. This will not work.  This is not  going to help my business.  I had to stop and check myse lf and be like, “W hat I’ve been doing is not working or has given me lots of more work a nd headaches and stuff.”  I told myself,  “ I’m  going to go all in. I f I totally disagree with what they’re saying, I’m  just going to do it.” P art of me was like,  “ I’m  going to  do it to prove him wrong, to prove that what they have h ere doesn’t work.”  I’ve put it in and started doing everything and all of a sudden ,   my business started growing  way more than I eve r had done before with this.  I’ve p roven myself wrong with it. I t’s that mind shift change.  I love the saying,  “W hen the student’s ready, the teacher will appear. ”  T here’s so much out there that when we’re ready, the teachers will be there for us .  

I f you’re not ready to learn the lesson, it will keep showing itself up on your front door.   Nathan, I know that there’s a lot of  ground in between these two points, but at one point you said  to  yourself, for whatever reason,  “I’m   going to  end this and I’m  going to go to  Alaska. ”  I know there’s a lot in between there.  H ere’s a guy who is s uccessful in Arizona. He’s got W ill working with him. He’s got a number of clinics and now you have  this idea of an exit strategy.  

G oing to Alaska wasn’t necessarily the exit strategy.  There was a goal there that Will and I had  that I was going to develop t his diagnostics business. We did s o in Arizona, we started some in Alaska and it started  getting better. W e had been doing diagnostics for a couple of years and it wasn’t gettin g any traction. We recognized that  we weren’t putting that diagnostics business into its own structure.  We  considered it this small department within our current structure.  N o one  really  had any ownership of it and so it didn’t go anywhere. We had some ideas around  it  but we never really focused on it. We decided, “If this is going to do something, one of us needs to take responsibility for it, make it its own business and set up its own entity.” I took over that. The agreement was that Will was going to focus on developing our leadership team so that he could free himself as well up from the day to day of the  Rise Rehab  at the time.  

If the owner actually owns the company and is not one of the laborers within it, then there's some value to that.
Click To Tweet

How many offices did you have at that point?  

At that time ,  we had merged . W e had that his, his and ours and we eventually merged. We had four clinics going.  

I believe it was close to twenty when you partnered with  Empower PT ?  

We didn’t necessarily grow our clinics from four to  twenty- plus. We simply gathered a bunch of people together to put ourselves on the market.  

That’s the interesting part. Here you are as your own entity, Rise Rehab. You’re in the Phoenix Valley, I guess you call it, the area and you say, “I can sell my four clinics to a national company or I can partner with these other independent practice owners and roll it all up and market that out and sell it as a bigger package.” Is that correct?  

Not totally. You make it sound like I was the brains of the operation. I definitely was not. This is why I’m glad we have Sean on,  because  he was in Arizona when a lot of this was happening. Will and I, we had a number of offers for our clinic over the years. People had approached us maybe three or four times and each time it was some variation of, “We’ll give you 70% of what we consider the value of your company in cash. You guys maintain 30% and you become essentially clinic directors or middle management. Keep doing what you’re doing.” That didn’t sound exciting. We didn’t get into it to become employees again per se. We’d said no a number of times. Like I said, this happened over the course of maybe five or six years.  

This is a conversation that a lot of PT owners have and it can be very disheartening after you’ve spent all your blood and sweat and tears building this baby of yours and somebody comes in and says, “We’re going to give you  X  amount,” when you thought it was going to be  3X . That might’ve been your feeling as well. What then gave somebody the idea to look around the area and say, “If  we do this a little differently , it can be more than what the parts are?”  

For sure.  W e got some of those offers. We were a little bit disheartened. There were some that were better than others, but we’re still relatively young. We’ll focus on growing more. We’re developing a leadership team to take off the day to day and we’ll make it their job to grow the next clinic and open it up and that kind of stuff. A few years ago, a friend of ours,  Jared  in the Valley , he’s someone that we talked to about selling  our companies in the past. He came to us and said, “ I work for a company that has  some physical therapy clinics.”  He was essentially the business manager, but he’s a PT and they wanted to divest their physical therapy stuff.  

H e said,  “ I have  an  offer on the  table.” I know I can get more if we  essentially increase ou r value by increasing EBITDA, profit margins and revenues and that stuff. We can attract  a bigger buyer who will pay more i n multiples and that stuff. H e ca lled my partner Will and he was like, “T hat’s  a cool idea. L et me think about it.  I’ll talk to Nathan.” From what I recall, W ill sat on it  for a little bit a nd then Jared called him bac k a month later and said, “What’d you think about it ? ” He reached out to me. I said, “I think i t’s a great idea if we can do what he says he’s doing. We could get more for  our four clinics than we could  on our own as the four clinics. ”  

W e started making calls  and that’s where we  reach ed out to  Sean. I reached out to a couple of other people in the valley. Jared did some of his own footwork and reached out to some people. We s tarted collecting some guys who were,  and correct me if I’m wrong, Sean,  in the mindset of, “I f we can take  advantage of  the current market,  it was  a hot PT  mar ket a couple of years ago, w e can get a higher multiple than  what we can get on our own. It’s  a buyer tha t we think is cool. We would consider it.” W e didn’t have any ties to it a t the time. We had this  loosely-held  NDA between us. W e formulated things together and got all got on the same page.  

L et’s  use Jared as an example. Y our business did not have to have shared resources or procedures or processes as Jared per se. Is that true ?  

Per se.  Sean, how would you describe that?  

E ssentially, we ended up wi th five different entities with  different policies and procedures, but most physical therapy practices were very similarly aligned. We had some that were stronger than others in terms of being organized and structured.  I t wasn’t  a  unique situation. I’ve never heard of it happening anywhere else before, but   it  wasn’t  a unique situation for sure.  

Sean, to use a vernacular here,  was it like herding cats?  

I n the beginning, it was a lot of work. It was like h erding cats, but  to the point of why we did it as  well  helps in this  discussion, for me anyway. It’s to paint the picture that  the mark et was hot, the timing was  good   and it  was the right concept that if we do come together as a bigger entity, there is more value t here, which then increases  the sale price of things. 26 clinics  are  worth more than my four clinics, essentially. F or me, something that everyone has to think about when the y go to sell their practices or whatever they want is  I’m about my legacy.  W hat’s going to happen to w hat I built? B ecause I was proud of what I built and what I had and what we stood for in the communities and  I  had a great name  in the communities. I didn’t want  to sell it to some big national entity who then comes in and changes all the paint colors  and  essentially rips out everything I put together.  

W hat this became was the opportunity to capture the market and get a great value for what I  thought my business was worth,  but then to also layout the fact that we could continue our l egacy of what we had built. It’s not only to continue  but grow it on a larger scale with more help an d other people to help us do it essentially. T hat’s what it was for me  and how it worked out. W ith that in mind, we got five other owners and  of the five, two of them  exited and  left out. T he three of the other  original  owner  stayed. T he three of us then took our cultures, our processes and them all into pla ce and are continuing them. A t first it  was herd ing cats to get everybody on the same page, but because we had the same v ision of what we wanted to do, it wasn’t hard to get the buy- in, if that makes sense.  

I understand. Using totally false numbers, l et’s say I’m a practice owner and I’m considering  this  and somebody  offered me $100,000 on my own. I then think about  making  this  arrangement, and I won’t call it a partners hip, but this arrangement. H ow is it that then I get back  $ 200,000  instead of the  $ 100,000? Should I be thinking of it like that?  

I think  you ca n think about it like that.  I want you to add on after I ta lk, Sean.  I talked to a few brokers as we were going through this process and t hey shared some generalizations. T hey’d worked with many PT, mergers a nd acquisitions and they said, “Y our typical practice  is going to be maybe around $1 million, maybe   $ 2 million if they’re doing  well.” T hat could  generate maybe two times multiple of your EBITDA,  maybe get a little bit more if the market  is hot. I f you don’t know w hat EBITDA is, it’s an acronym. I t’s essentially your net profits  with some of the  add- backs. Y ou can get maybe two times a  multiple for a small clinic  like that. I f your net profit is  $ 10 0,000, maybe you get $100,000 to $200,000,  but if you were to increase that EBITDA to a point where now you’re talking to some larger buyers, not  just  some local dudes, but some national guys who wa nt to plan a national scale,  the n you can get higher. You can get  four times  the  EBITDA or five times maybe .  

I think that’s an important distinction to make for your listeners and that is that it’s not  just  gross rev enue, but it’s EBITDA. T he higher it can g o, the more there is latitude and  a higher multiple for your  sale.   

Do you want to add anything to that, Sean? What do you think?  

It’s spot on. N ow that I’m  on  the other side where we’re trying to acquire  people, you hit it on the head. Y ou’re a one or t wo clinic platform. T he two, maybe th ree  multiple  off of your EBITDA,  the bigger your platform, the more that EBITDA goes up, t hat valuation goes up. I f you’re a six, seven  clinic , you’re probably m ore four or five. D epending on wher e you’re at and how strong your EBITDA is,  that  can even go above five. T he typical PT practice is probab ly a three to five EBITDA .  It’s what you typically see.  

To add a lot of value is to essentially work your way out of your business prior to the sale if your goal is to sell it and not work at anymore.
Click To Tweet

Sean, I want to come back to something that you said and dig a  little bit deeper in them. T hat is  what  you said the timing was right. How w ould a clinic owner figure out if the timing is right?  

There are  a  few factors there.  One  is where are you in your career with your business? I  was taught by our consultants  a few years ago that you need to start preparing  your business for sale now.  I w as like, “ I’ m not selling my business for  several   y ears,”  but I started to do it anyway  be cause back to my po int of listening to them. T he stronger you are to position your business for sale and there are things you should do to do that, which maybe  should be another podcast,  there are some key  things there. A s far as the ma rket side, what I noticed  bei ng in the profession for over fifteen  years is the first probably eight years of owning my practice. Nobody was knocking on my door . N obody was sending me any emails wanting to buy my practice.  

A ll of a sudden, like Nathan  said, I started noticing, “We’d like to buy your practice,” or soft reaches, “W ill you be interested in selling  it?” T hat’s when you started no ticing things come around. T hen you started getting more and more  people hitting you up. I t’s  like selling your house. What’s the market doing? Where is the pricing at? W e all know when the market i s high for selling or house. T he PT clinic side  was the same thing for me. T hat was all of a sudden out of the wood where pe ople were coming left and right  trying  to make offers to come in and made me pause and go, “W hat’ s going on here? What is happening?” W e can all remember back in these days, but in the  ‘ 90s, the same type of thing that I saw hap pening in our profession was  happening in our profession in the  ‘90s. I t has it s  cycles  as  the housing market does. I t was o ne of those things like, “H ere’s the cycle and now’s an opportunity. If I’m ready to do this and go on and do different things with it, this would be the perfect timing to do it because the ma rket is so hot.” I hope that helps.  

It certainly does.  I  think  that your  audience will  have maybe one office or two. T hey could be a little bit heartbroken right now to think about that the value of their business is two to three times their net profits and, but what you’re showing with your journey, Nathan, is that in  “ partnering up ”  with other local independence, your one to two office platform might  permutate into a ten, twelve to fourteen- office platform and be much more attractive to a bigg er fish. Is that accurate?    

For sure. A  lot of the value comes off of the numbers. That’s how they’re going to value  the  company. You can add value to your company by not increasing the numbers, but they want t o see general growth trends.  I  had done some  episodes  on this. I  d id one with  Paul Martin . I  did ano ther one with  Steve   Stalzer  of 8150 Advisors. One of my first episodes was  with  John De a ring  who works wit h mergers and acquisitions. T here  are  a number of things you can do to prepare, but they’re  going to  look at the numbers. They want to see good policy and procedures in place.  

They want to see growth trends ov er the last few years. N ot stagnation, but continued growth and a strategy for continued growth because they want to know that   once you sell, you’re not going to walk away. There’s going to be a focus on increasing  what they’re buying  so they can increase  the value of their investment. Another strong aspect is if the owner’s not treating. I f the owner owns the company and is not one of the slave laborers within it, th en there’s some value to that.  I f they take him out, they’re going to have to replace him with someone else.  T hat goes back to structure, poli cy, procedures, organization   and all  these things  that  make a company more valuable without necessaril y hitting the bottom line. W hen you do those things, your bottom line improves.  

B ack to your question a little bit, maybe they’re a little bit disheartened, but I’ve told a number of  people across the country,  what we did could be done in other places. If you know any of the other people in your community, some of the other owners, and you’r e looking at an exit strategy, w e calle d a lot of people.  I call ed  a number of friends that weren’t ready. They’re like,  “ I don’t know wha t I would do if I would sell.”  They’re like,  “ I’m happy with what I’m doing ,” or “What is an EBIDTA?” They’re across the board. They  weren’t inte rested in selling at the time, and that’s fine. I f you are looking at an exit strategy or if you want to take  advantage of the market, s tart working your network.  

Talk to some local people, see if you can get some people who are on the same page and then there are opportunities out there. You reach out to some people who might repres ent you on the market. Y eah, you can get a little bi t more for what you’re doing.  I know you didn’t ask this question  Steve n, but I would say if you’re looking to sell  any time  in the next  few  years, now’s the time to do it because it’s going to g o through that cycle again.  I don’t think it’s go ing to be as hot as it is now.  I think we’re at the tail end of that cycl e, honestly. I t’s not going to come around for a little while.  

Sean, from your perspective,  what Nathan did was he got a consortium of local practice owners, probably within 25 to 50 miles of him. Is there any advan tage for him to have said, “ I’m going to get my pal in Tucson and m y pal in Albuquerque and my pal in Colorado  Springs.  E ven though we’re not  going to  have a map or a footprint that’s every three t o five miles in that geography, I’m placing  some pins  down in a very large area ? ” I s that an increased value, a decreased value or a wash from your perspective?  

I think it’s an increased value from my perspective.  W hen we did our deal, we ended up with clinics in California and one in Louisiana, which is the off b eaten path one and kind of weird. The market share,  getting it  in multiple states is good.  I will say some states are more attractive than other states are depending upon reimbursement rates.  Is  your market dominated by a  hospital- based system?  W e’re in the process of acquiring clinics that are states that we are not even looking at  it based upon  reimb ursement rates and the hospital-based systems  that we don’t even go into. I do want to go back  real  quick as well and adjust something that Nathan said about selling your business.  

I t hink the key thing to learn is that as owners, we are the  goodwill value of  the clinic. I f you look at selling your business down the road, if you’re in the business, working it a lot like say 40, 50, 60 hours a  week l ike we all did  some times . Y ou go to sell your business and you’re telling the pe ople you’re selling it to, “ I’m  going to  sell it to you and I’m walkin g away,” your business is  now less valuable because you are a huge integral part of why the  business is successful. A nother way to add a lot of value is to essentially work your way out of your busine ss prior to the sale i f your goal is to sell it a nd not work at anymore. That’s a key point. The way I got my business is  it was running where I didn ‘t have to work in the business  unless they want it  to where it didn’t need me. I f I wanted to exit, I could’ve left and left all the key people who were the key to making the business  run . There’s more value to that  if you want to exit out, if that makes sense.  

It certainly makes sense to me and  one way you can test your ability to do that is to take a month  off. I f the prospect of taking a month off makes you want to vomit, then it’s likely that you have not put the systems and processes in plac e to allow you to do that. T hat’s a good stress test.  

Yes , t h ere’s more value in a business where you can take a month off because you’re no longer th e  goodwill value of that business.  

It makes total sense. Nathan, looking back on this process, what would you have done differently?  

I  don’t know. Sean might agree there was an elem ent of timing there. We found  a  partner  and th is was something that Sean and W ill were definitely a part of as fa r as they interviewed  the interested parties that came through P hoenix. We found a partner that  I would say is relatively ideal  in allowing Sean and, Matt and W ill to carry forth our company va lues, visions, policy and  procedures that we all had some l oosely held agreements too and not disrupt that. E mpower physical therapy became something that’s greater than ours elves and a greater  expansive are divisions  that we already have. I think  I’m speaking for you Sean, but things came together  in an opportune way for us  to do this  be cause we had a great footprin t across Phoenix. We  met up with a great partner. We have some great leaders in place. When you talk about  W ill and Sean and Matt and the  CEO that we brought on , t here’s  not a lot I can look at and say, “ I would’ve done things differently. ”  Things worked out well for us.  

You don’t think that  all the stars were aligned  per fectly  and it can never happen again. This  situation can be repeatable across the country with other practice owners.  

I would think so. T he benefit that we had was that Jared had been t hrough this process before. The guy, Jared Bowman, who started  this ball rolling, he knew  the landscape well. H e also knew the people  to talk to. We did have that in our favor  that other people m ight not have. A nyone that puts forth a little bit of effort and tak es the banner and runs with it  could do the same.  

I would agree.  It does take a little work.  Jared was a huge help  because he understands the  business acquisition side and understa nd s  the power of the  equit y world better than we did. T hat was w here our strong play was. Yo u wo uld need someone like that, but  that’s what you d efinitely could do. W hat was different about us is that in the beginning, Nate mentioned it and I  said it too,  people were approachi ng us to buy our business. W hat we did that was different was we came together and then we started approaching the private equity firms and shopping them.   

W hat we realized is that there were people were approachin g us  whom I’ll  never  sell  my business to them. We’re like, “L et’s find somebody who understands our vision and what we want to do and  is excited about it.” W e went  through that process, which was close to over 30 PT  firms that we reac hed  out to interview about ten of them in person. W e ended up finding the group that we went with that loved our story  and loved what we wanted to do  as a profession and was totally on board, so it definitely can be done.  

When you do things that add value, your bottom line improves.
Click To Tweet

You’ve  brought up a good point there,  that  maybe we didn’t iterate it, but we had  an ideal partner in mind. I f we’re going to exit and we’re going to sell our legacy to someone else, this is what they’re going to look  like  and this is how they’re going to be. It’s not necessarily the best id ea to take the highest bidder. I t’s valuable before you sell to number one, maybe have an idea of the number that you want, but also number two, who do you want to partner with?  Y ou want to vet that  because  that’s  going to a ffect your life signi ficantly going forward. Y ou want to make sure y ou’ve got the right person with  sh ared alignments in values, vision,  growth strategies and whatnot. You want to make sure that you’re partnering up with the right person or group.  

T here’s a lot of due diligence that needs to be done.  There’s no doubt about it. Sea n, where can our  audience  contact you?  H opefully from this show , people have  a lot more questions  n ow than they did before work. Where do  they contact you if they h ad additional questions for you?  

T hey could always reach out to me in my email . It’s  SMiller@EmpowerPT.com .  I love helping people and  I  love showing people what to do and what I’ve learned from it. I’m a big believer that we’re alw ays growing and learning.  I’ve always said,  I’m the biggest rip off artist there is. I  steal from other people what they’ve  done and implement ed  it. If  that works, I’m going  to do that. It’s not to say , “C ome steal from me ,”  but come steal from me. I’d love to share with things that people are interested in trying to do this or what we  did  and  I’ll  be more tha n happy to take time  and talk to and discuss it with them about it.  

G oing back to what  you were asking me about me, Steve,  if other owners can do that n owadays what we did, go ahead and try it. Reach out to Sean and say, “ I’m t hinking about doing this. W hat  are some tips that you have?” Reach out to the guys at E mpower PT that  did it. We can guide you.  I f you’re looking to sell, Empower PT’s  a great place to go. I’ll put in a plug right now.  

I’ve got to say the same thing. If you are looking to sell,  we are still looking. W e are trying to expand and  grow  and we h ave a huge vision belief behind therapists. Our core value is patients first. We’re a PT- centered company focused on the profession, trying to  enhance the profession. W e’re looking for people with  that same mindset that want to help us continue that vision out to the public. C ome talk to us. We’re always open to that as well.  

Sean, I want to thank you for your time and your expertise. Nathan, I want to thank you for being on your own  show. T hat’s  very nice of you to show up. I’m sure  it’ll be an interesting listen for yourself and your family and  all your friends.  I encourage everybody to tune in for every episode because there is a lot to learn. Nathan is spouting out truth bombs left and right and we’re all  the  better for it an d everybody in the profession thanks you for it. T hanks again for your time.  

Thank you, Steve .    

Thanks for having me.  

I think  it was  great to do this little forum. A  lot of people could learn from what we did and if they wanted to reach out to us personally and bounce some ideas off of us or ask for some insight  or  may be you can help me with this,  feel fr ee to do that, whether it’s Sean or me, it’s  Nathan@P TO Club.com . By all means, reach out. Steve , thanks for offering to do this and I’m excited that we got the opportunity to sit dow n and do it.  

All good things happen when you shoot from the hi p and have no script and let it rip. Y ou guys are very good sports and, we came up with something good, don’t you?  

D efinitely , t hank you so much,  Steve .  

E njoy the rest of your day and thanks.   

Thanks for your time.

e also serves as Vice President of the Delaware PT Association, as well as sitting on the IMPACT editorial board. Stephen plans on devoting the rest of his career to promoting independent practices across the country.

He now specializes in treating vertigo, balance, and orthopedic cases involving the shoulders, cervical (neck), and knees. After years of treating patients, full-time Sean realized that he was just 1 Physical Therapist and only had the ability to treat so many patients at one time; It was this realization that sparked the dream of owning his own practice. “What if we had multiple therapists all with the same skill and passion? The impact would be even bigger than just 1 therapist”. From this Sean along with his brothers opened Kinect Physical Therapy in 2012. “Opening Kinect Physical Therapy has been one of my greatest challenges, but to see the larger impact we have on the communities and in our patients is why I do this.”

Sean when not making an impact on others life’s enjoys spending his time with his wife and their 4 children. He is often found on the sporting fields coaching his boys teams, at the lake wake surfing or headed to the beach to enjoy the waves and surfing. His favorite quote that he lives by is: “We are what we repeatedly do, excellence therefore is not an act but a habit.” – Aristotle.

Love the show?  Subscribe, rate, review, and share!

The post Step Out – Reach Out – Network: The Real Life Formula For Nathan Shields And Sean Miller with Stephen Rapposelli appeared first on Physical Therapy Owners Club.