Consider Exit Options With Matt Slimming, PT, DPT

In today’s episode, Nathan Shields and Matt Slimming, PT, DPT discuss what owners need to consider when it’s “time to hang ’em up,” when they’re taking advantage of a sale opportunity, or when they’re simply burned out. All owners need to consider when and how they want their ownership story to end. There are many different ways to exit your practice, but the first thing to do is consider “why.” Why do you want to exit and what would leaving your practice do to further your personal purpose? Figuring that out will definitely help in determining “if” and “when” you want to leave besides simply following the $$.

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My guest is a returning guest, Matt Slimming of STAR Physical Therapy in the New Orleans area. He also has STAR Fitness and owns STAR management companies. I reached out to him. Matt, thanks for coming on. I appreciate it.

Thanks for having me, Nathan.

Thanks for coming back. If people want to learn a little bit more about Matt, where he come from, and his journey as a physical therapist, especially as a physical therapy owner, go back and read our blog. It was over a few years ago, wasn’t it, Matt?

It was definitely before COVID. I reckon it must’ve been in 2019.

We’re at the early part of 2021. I came across an article that you wrote in the Impact Magazine of January 2021. You talked about Exit Options: A Different Perspective, How To Exit Without Walking Away Entirely . It’s been some time since we’ve talked about exiting options here on the Physical Therapy Owner’s Club Podcast. A return to that with a friend of the family, I thought would be cool. I’d like to talk a little bit about exit strategies with you if that’s okay.

We’d love it. Thank you so much, Nathan.

What inspired you to write the article to begin with?

Most PT owners or at least a good proportion are semi-continuously experiencing those offers to buy. They keep on coming through email and letters. If you get enough of those, you start thinking, “If I keep getting these, maybe I should.” It’s a great thing to do when you’re at that point of your career where you’re ready to sell and you’d be okay. You are usually working for the buying company for a little bit and putting your time in. Oftentimes, they want you to add another clinic or two which makes a lot of sense for the purchaser. For a lot of guys, they don’t want to give up the benefits of business ownership but they do want to give up some of the headaches.

We come across a lot of folks who are in that category. They don’t enjoy parts of what they’re doing as practice owners, “I didn’t sign up for all this,” but they still like having the business. There are a lot of good financial reasons to be a business owner. When you run through those calculations of the benefits of having a company, all those write-offs and things that you can spend, it makes a lot of sense to keep that business if you can. We’ve been able to achieve it for ourselves where we’re able to retain the eight clinics that we own with it being a very easy, fun thing to do. Enjoy the benefits but not have the headaches that go along with it.

Especially at this time now, as we’re slowly coming out of the pandemic, some people can be anxious to sell. Some people might be situated in a position where they’re looking to purchase. You alluded to this in the article and we talked a lot about it. One of the very first episodes of the show, when I got started, was with Robert Dearing. We talked about preparing your business for sale. That’s a long-term process. It’s not an easy thing to do. One of the first things we talked about is, why do you want to sell? A lot of it is based on that. You ask those two questions at the very beginning of the article. What is your dream and what is your calling? In other words, what is your purpose? That’s a personal question. No one can tell you what your purpose is and there are not a lot of easy exercises to go through to figure it out but essentially, what is your purpose that would make you want to sell.

For some folks, they might determine, “I am not doing what I was called to do. It is time to get out.” That can be a good reason to sell. There are some great agents around that can help get you ready for sale and can take you through that process. For many of us, we’re doing what we’re called to do. We’re in the healing profession, helping people and we’ve got employees where it’s our responsibility to steward those as well. If you’re already in the realm or you’re in the industry that you are called to be working in, then you won’t be happy if you fell and you were fishing for a while.

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I went to a great meeting about exit strategies a few years ago. I think I mentioned this in the article. I went up to the professor afterwards. I said, “Out of curiosity, for most of your clients, what are they doing after they sell?” He smiled and he said, “They love going fishing for about six months but after six months, that’s enough fishing. Most owners are backing the field in some manner.” If you’re going to get back after the sale, why leave in the first place? There’s maybe a better way to stay in it, not go through that whole process and that six months vacation.

I see a lot in the physical therapy industry. You don’t see a lot of physical therapists that are 60 or 70 years old and still treating full-time like you might see dentists or doctors. I can safely say there’s a lot of burnout when it comes to treating patients full-time in the physical therapy industry. If that owner first hasn’t stepped away from treating to run the business, own the business, and do what the business needs to run efficiently, if they haven’t done that and they’re considering selling out because of the burnout factor, then maybe they should step out of the treating aspect first. Give themselves some bandwidth, energy and freedom to do that first. Your mind then has the capacity and the space to think about, “What do I want to do?”

That’s a great point, Nathan. I tell my PTs and the clients we work with that are still treating patients, I do believe that being a physical therapist in a busy environment is one of the most emotionally taxing jobs you can have because you’re connecting continuously with people. It’s a blast. Don’t get me wrong, it’s fun. There are so many highs. The emotional load is pretty great. We connect with these people deeply three times a week. They tell us their life story and we’ve got to be involved and engaged.

That’s one of the many reasons why there’s a lot of burnout and it can be one of those things that you realize when you’re not working full-time as a PT if you can get to that point where you’re working a few hours as a PT. Most of us would do that for free. It’s not full-time, it’s 40 hours a week, it is a job and it requires quite a bit. A hands-on PT, 10 to 20 hours a week, that’s like a vacation. Who wouldn’t want to do that? That’s a blast. Even just helping some of these folks, get some time off. Get a couple of days where they’re not fully in the clinic. It allows their mind to open. They say, “I can have some fun in helping fulfill that responsibility to my community and my staff.”

One of the friends of ours that sold with us a couple of years ago, when we sold, it was a tough situation for him to consider because he had grown his three practices by that time to a point where he had a leadership team in place. He was managing things well, and his leadership team was managing things well. He wasn’t treating at all. He didn’t have to do much outside of 3.5 days a week. When it was time to sell, he thought, why would I give this up? Why I’m doing what I want to do? This is a dream for me.

My clinics are successful. I’ve got a team that’s running it and I’m seeing growth. It’s at that point that you have to figure out what your purpose is but it took a lot of work to get to that point. He was at the place where he could make an open decision and was not forced one way or the other. It was simply up to him whether he wanted to move in a different direction or not. That’s why it’s so important. I’ve noticed that in some of my coaching clients to get them to the point where they have the space to consider the exit strategies.

What happened with your friend? Did he went through with the sale?

Yes. He was part of our sale. He ended up working with the company that purchased us, Empower Physical Therapy for a couple of years. He stepped away and they found a replacement for him in a VP of Operations capacity. Now, he’s moving on but he’s looking at other things that will fill his space. Honestly, getting back into the physical therapy space although it’s not ownership, it’s something that he’s considering heavily.

It’s funny. He’s in that realm. That’s what he’s good at. It sounds like he made a great decision for himself. He got some great cash and he has a bit more freedom now to choose what he wants to do.

I have another client but I was a little bit hesitant to even recommend it but he was approached by someone who was looking to purchase his business in his area. A lot of things simply lined up. When I challenged him on how does this help you fulfill your purpose, he was able to nail it. “This is what it does for me. If I sell, I can minister more,” which is what he wanted to do. He was able to nail it right off the bat. “If I sell, I’m able to provide this service and even go into a niche that I’m excited about, developing and expanding.” We went over worst case scenarios.

“If it didn’t go well then what?” “I’ve already talked to a couple people who have sold out to the same buyer in the past and they’ve been happy in their situations.” Coming to me, he wants feedback and it’s not up to me to necessarily give him the green light but for me to give them the thumbs up was pretty cool because so many things fell in line with what he wanted to do in life. It was cool to see him get to that point and find a position in which he could fulfill his purpose by going through the sale.

When someone can find their purpose and then they can make a decision that allows them to move deeper into that is a win. You don’t want to get away of that.

You mentioned a few of the different exit strategies in the article. Take us through some of those and we can share our thoughts about them.

There’s the sell which we’ve talked about where you sell to the traditional outside of the organization. You can sell to your own staff. You can have them buy out the company over time or a portion over time and that can work well too. For the third option that we try to make clear and should share the benefits is to have a management company step in and take over the things that they own that doesn’t enjoy. When we talk about these clinics that get these great multiples and sale, the majority of the clinics in the country aren’t at that point where they could come out of the wonderful price.

I would imagine most guys that you work with as a coach, they’re struggling in some area. Things aren’t going quite as well as they want them to. That is tough. We’ve all been there when the clinics aren’t running right, when there are deficits and financial stress. That affects our entire life, marriage, kids and health. That’s who we mainly work with. The folks that have a pinch point in their life. Their billing is not going well. They know that their billing company or they’re trying to do it themselves, and it’s not working out well. We can take over that billing headache and give them greater revenue. Maybe it’s the marketing piece. Everyone has seen how many marketing companies have come online and trying to do online marketing but we all know that it’s not a miracle.

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You can’t just turn the spigot and suddenly have twenty new patients a month with a fancy online marketing plan. It’s going to be built from the ground up. A lot of owners are struggling as they were like, “I was paying so much money for this funnel campaign and it didn’t work out for me. I still know I need to be involved online but I don’t want to learn it myself.” These are the kinds of things that make sense to outsource to a group that can do it successfully even an outside marketing where you have someone manage your marketing staff on the ground.

It’s a time-consuming thing and it does require some specialized knowledge to be able to lead a marketing person or a marketing team to be successful with the right systems in place. When you think about your clinics like, “What is there that is a headache for me? What is there that I don’t enjoy?” The chances are there’s someone like us who can take away those headaches, do it better and make it something that is a strength of the organization rather than a weakness and a headache.

I love the analogy that you shared in your article. You say, “People sometimes want to sell their business to change their lifestyle. That’s like selling the house you love, getting the cash and then moving into an apartment because you don’t like mowing the lawn.” It would probably make much more sense to hire someone to mow the lawn and do the thing that you don’t want to do. He’d do it better than you anyways. I thought the same thing and you recognize it as a young owner. Once I found someone who would go, pound the pavement, knock the doors for me and do the marketing, that was heaven. To have someone else responsible for the marketing stuff and then to land on a great biller who I could trust and give me the reports that I wanted to see and that stuff. What a huge relief and take the headache away.

To find someone who could do some of my financial stuff, prepare my profit loss statements, balance statements and can help communicate with the CPA, how beautiful. Outsourcing some of those things, not only do they get done better and it improves your profit margin, even though you think this is going to add to my expense line. Is there going to be any money left for me when you are the hurdle? You are the obstacle that’s keeping you from doing better in your business because you’re not outsourcing the stuff that you don’t enjoy doing or the stuff that brings you energy thus, it doesn’t go well. Finding those people to outsource those things is huge.

We’re all reticent to spend money, aren’t we? We all inherently think that, “I should aim to spend as little as possible.” Particularly when it’s not a great year. If you’ve been affected by COVID, for example, you’re like, “I don’t want to spend any money,” but you’re right. That’s the investment that you need to make. That’s going to have the greatest ROI in your business, for sure.

I’m bringing this off the top of my head but an exercise to consider is what’s the one thing that you hate doing. What’s the one thing that you dread doing? What do you not want to face every week or every year and then find a way to outsource it if possible?

The chances are, if you hate it, it’s not getting done. You procrastinate on that. Every single month, it’s getting later and later and there are some repercussions for that. That’s a great exercise, Nathan. Take that thing and what is that one thing that you dread. The great thing is in our industry, we help a lot of PTs where we’re always happy to chat. We’ll happily chat to PTs that have questions and want to know more. As PTs, what do they call us? We have that helping gene. We want to help. There’s no reason that a PT should not feel confident. Picking up the phone and having a conversation with someone yourself or myself to get some answers and perspective.

To go back to considering exit strategies, if you’re at that point where you’re still treating full-time, considering it exit strategies isn’t your first step. You know the process and I’m sure you’ve seen it if you haven’t been through it personally but there’s a lot of preparation work that goes into preparing your business for sale if you want to maximize the value of it. There are some buyers that are out there that’ll give you 50% of what you could get if all your ducks were in a row. If your financials were all lined up, your contracts were well lined up, and you were running things according to a written policy and procedure manual with a leadership team in place. Those are all things that are going to bring significant value to your business whereas if you’re like, “I’m sick of this. I’m throwing up my hands. I don’t want to do this anymore,” trying to sell your business, you’re not going to get a whole lot for it.

You’re not going to get the return that you could certainly get if you invested a few months in getting things right. There are lots of reasons. You feel for the companies that are buying when they come in, do their audit and realize, “Your compliance isn’t what it should be. We’re going to need to fix that.” There are a lot of things that they might need to fix going into that. It’s fair enough that all those things that they notice that aren’t quite squeaky clean are going to take some of the price down a little bit. Whether you work on those things yourself because you want to one day get ready for a sale or you bring an outsource group in to take care of those things and get your right.

One way or the other, it’s in your interest to do it. We don’t do compliance but there’s a couple of great compliance companies that make it a much less painful process. I’ve spoken to PTs, they don’t want to go through that voluntary compliance audit. It’s a great thing to do these compliance companies. BCMS, for example, do a great job of making the comfortable process and helping you move in the right direction. That’s not something that we do but there are companies out there that definitely worth going down that road.

As you’re working with some of your clients, where do you find that you guys add the most value? Is it in the billing collections side? Is it in the marketing stuff? Is it the building infrastructure or leadership teams? Where are some of the bigger pain points and where do you find you bring some of the most value?

It’s across the board. The folks that have the challenges with their billing and collections, they have the most pain going on. If you’re collecting even if it’s 10% less than you should be on your visits, that hurts the bottom line. It limits your options. That perhaps where we have the most emotional conversations with owners but we do have owners that are passionate about wanting to help their staff. They know that it’s time. They need help in putting together a performance system for their staff and to help their staff grow into the producers that they can be. To help this staff grow as individuals, those are great conversations because it’s a pain point or a pinch point. Maybe they’ve had some retention issues and staff leading more frequently than they should. It’s one of those things that you can very quickly turn around with the right kind of leadership training.

The cool thing that I’m coming away from this interview is hoping that the audience recognizes that whatever your pain point is, and this wasn’t true when you and I were young owners, but nowadays, there are many resources that can help you. It takes an investment but you have to look long-term at that and take a bigger perspective to see the return on an investment in a pain point can do so much, especially if you’re starting from a position of limited knowledge. A lot of us don’t have a lot of business knowledge. That’s not what we were trained for.

We’re not taught that in school. We were talking to a clinic about taking over their marketing online and direct to the physician. He’s like, “I don’t want to kiss me more babies.” I don’t think he’s like kissing babies but that idea of, “I wasn’t put in this position to be a salesperson. I’m not a politician.” That’s not why we got into this gig. A lot of things that thrust upon us as PT owners that don’t fit with our personality.

There are so many resources nowadays that can help us to either train us on how to do it, do it better or take it off our plates so that we’re managing it instead of doing the technical portion of it. Going back to my mantra, you got to reach out, step out and network. When you reach out to find those resources, vendors, coaches or consultants that can help you with those pain points, that’s when you start to see growth and the difference. I’m sure you’re seeing the same thing. As you’re coming in and helping these clients, their attitudes change, they have different mindsets, their hopes and dreams changed a little bit and they have different perspectives.

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Relationships change too. If you’re suddenly coming home optimistic at the end of the day, you’re not burnt out because you’re seen hope that can make a change in the house. We don’t talk about it too much. The long hours at work and failing, the effect of those things on our marriages and families, that’s where we see the greatest return. It’s when owners start having hope and getting the things that are getting in the way, and get them out of the way. They’re able to focus on their marriage. They’re not thinking, “I do have an anniversary coming up. I should do something about that.”

One of the toughest stories I have is I came to work. I remembered it was my receptionist’s birthday. It was March 11th and I was lit, “Happy birthday, Patricia. I want to make sure it’s a great day for you.” It may have got a little something. I thought I’d done a good job that day. I’m taking care of my staff. I remember their birthday and all is well. You can guess what happened. It happened to be my anniversary. I completely have forgotten that at the expense because it’s my marriage. That was in a spot where I was overwhelmed. There was too much going on. I couldn’t obtain the little things. That was a tough time. I think that was a sofa night. We’ve been married for many years but for a while, the marriage came second to the business and that’s not a recipe for happiness.

Was that a turning point in your business at that time or your ownership?

It wasn’t enough for me to make a big change. I was in the grind mode here. I would say, that was about a five-year span where things were tough for us. We’d grown a little bit too quickly for our business acumen. This has been back around 2006, 2007 and I did not reach out. That was the error that I made at that time. I did not get the help back then. As we’ve talked about it, I wasn’t available nearly as much back then. I didn’t get the help that I needed. I struggled through and it took me thirteen years to get to the point where I’m at now. That was six years to get good at these skills and things that we’re now helping other companies with. It would have been nice to reach out to someone and have them take care of this stuff at that time.

Nowadays, it doesn’t have to take six years. There are experts out there that if they don’t take it off your plate, help you to accelerate the process. What a benefit that is to the industry nowadays is to have people like you out there.

As a physical therapist, I am committed to feeling that we are the most important part of the healthcare puzzle because we’re seeing these folks three days a week. The main threat to the health of the nation is chronic disease. The majority of that can be addressed through lifestyle change. There is no one and no discipline and more able to help the nation make that lifestyle change than us. We’re in close contact, we’re connecting, our patients trust us and we’re seeing them frequently. It’s essential that we, as PTs, take that responsibility to reach out to the experts that we have so that we can do everything as a field that we’re called to do. We’ve got some great PTs who are doing great work. How much more could they achieve if they weren’t being held back by those unpleasant components of management that they have to endure?

I love the path of our conversation has taken. We were initially talking about exit strategies and whatnot. Now, we’re talking about how different options to improve some of those different aspects of your business first before considering it. I think that’s where a lot of owners are. They can shore up here first before they consider their exit strategies in order to see if that’s what their personal purpose is. If people wanted to get in touch with you, Matt, how do they do that?

The easiest is my email which is Matt@Star-Mgmt.com. We’re also on Facebook, STAR Management Company , and people can reach out to us through there as well.

Thanks for taking the time to talk to us a little bit about that and thanks for the article again.

You’re welcome, Nathan. It’s lovely talking to you. It’s always a great perspective chatting with you. Thank you for the time.

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