FORT WORTH, Texas, July 12, 2022 /PRNewswire/ -- VERTESS, a leading healthcare mergers and acquisitions (M&A) advisory firm, is pleased to announce the addition of three new Partners. Managing Directors Rachel Boynton, Anna Elliott, and Robert Villalobos are the newest additions to the leadership team. All three bring a wealth of knowledge and experience to the team and will help shape the growing enterprise with their guidance and expertise.
Rachel Boynton joined VERTESS in 2018 as a Managing Director and has proven to be a successful, dedicated, and compassionate team member. Prior to joining VERTESS, she co-founded a multi-state human services and healthcare organization where she oversaw the operations, finance, human resources, and quality insurance departments. At VERTESS, she provides M&A advisory and consulting services to the intellectual and developmental disability (I/DD), behavioral health, and related healthcare markets. "As a former healthcare business owner, I know how dedicated the leadership team needs to be to run a successful company," Rachel noted. "I am excited to further support the VERTESS team as a Partner."
Anna Elliott is the most recent addition to the VERTESS team of the new Partners, having joined earlier this year. Prior to her Managing Director role with VERTESS, she co-founded a boutique M&A firm in Pennsylvania, where she developed her passion for mergers and acquisitions. She brings over 15 years of experience working in high-growth, healthcare technologies with specific experience in Deep Tech, SAAS, Artificial Intelligence, Machine Learning, Ambient Solutions, and healthcare companies. She is eager to continue her work and further expand her footprint in the healthcare industry as a Partner at VERTESS. "Although I am new to the VERTESS team, I have been wowed by the entire team's professionalism and attention to detail," Anna stated. "I am looking forward to many years of success!"
Robert Villalobos began his tenure at VERTESS in 2016 as a Business Development leader. Prior to VERTESS, he worked in public relations and marketing in various industries and facilitated the operation of a non-profit business incubator for entrepreneurs and small business owners. In his role as Director of Business Development, he sourced and cultivated leads for Managing Directors. He transitioned into the role of Managing Director and Partner earlier this year after demonstrating a natural ability and keen proficiency with the transaction process by closing several transactions while still in the Business Development role. "Becoming a Partner was important to me because it gives me a stake in the success of our firm," Rob commented. "It continues to help motivate me personally to drive value for VERTESS as a whole."
For more information, please contact Vaughne Glennie, Director of Marketing + Operations/Partner, Rachel Boynton, Anna Elliott, or Robert Villalobos at +1-520-395-0244 or 340335@email4pr.com
Volume 9, Issue 12, June 7, 2022
Two of the most frequent questions sellers of healthcare businesses ask VERTESS Healthcare Advisors are, "What can go wrong? How can I prevent my deal from falling apart?" Some deals are simply destined to fail, whether it be because a buyer or seller changes their mind or the parties come to an impasse. But then there are those potential deal killers that can be avoided.
Based on some recent experiences, my colleagues and I have compiled 10 reasons deals have had the potential to fall apart and offer recommendations for what you can do to reduce the likelihood that your deal experiences an unfortunate ending.
Wrong lawyers — It can't be stated enough how important a trusted and knowledgeable lawyer is for a deal to be successful. I recently worked with a team that used their trusted lawyer. However, this attorney had little experience in healthcare M+A. Even worse, he felt he knew the business better than the owner. This belief became a problem when the owner agreed to conditions with a buyer, but the lawyer disagreed with the arrangements — and the seller could not convince the attorney to change their perspective. Our deal almost died because the lawyer wanted to continuously negotiate points that the seller had already settled with his team.
It is important to listen to the advice of your lawyer, weigh your options and risk tolerance, and then make a decision that is best for you as the business owner (seller) and the deal you are negotiating. An experienced healthcare M+A lawyer should understand the particular deal components that are standard versus what areas to push back on. They should know the nuances of state and federal licensure requirements and exposure potentially facing a seller. A great lawyer will also know what to hold firm on and what battles are not worth fighting.
Poor vetting of buyers — It's not uncommon to see a buyer submit a letter of intent (LOI) that essentially locks down the seller and gives the buyer exclusivity to information. The seller might get a great offer from a buyer in an LOI, but this is not a binding contract. An offer often changes once a buyer finds reasons to lower a price.
This is why we often tell sellers that it's usually not difficult for anyone to find a buyer; however, finding multiple qualified buyers who will be honest with their offers is more of an art. We work to secure several offers for the organizations we represent. This way, we can work to determine which buyers are likely to be more trustworthy with their offers and which are likely to re-price or change expectations. With this information, we can better advise them on which written LOIs are worth considering. Although, as previously noted, these written offers are not legally binding, they should act as a "handshake" that outlines the key components of a deal that helps the seller find the best offer for them and do so without surprises.
Weak company representation — During the selling process, an owner has many opportunities for conversations with the buyer between the initial introduction to the final closing. Remember: A buyer is usually not simply purchasing a building but all the innerworkings of an organization. A company's projected, future success under its leadership is likely one of the reasons for the buyer's large investment.
A buyer will want to not only talk with the owner/seller but eventually some of the key leadership that will remain following completion of the transaction. During this process, it's important for everyone representing the seller's business to put their best foot forward. If a buyer doesn't care for the employee helping to communicate information, the buyer will be unlikely to keep this team member on post close. Worse, if communications with owners and staff are poor, the buyer may pull out of the deal. Buyers are looking for quality organizations. How a seller and their staff represent themselves during discussions with a buyer can be a deal killer.
Non-alignment — One of the first things that I will ask a seller about is their motivation for selling. Some people simply want to cash out, but most want a caring and innovative buyer (and leader) who will take their organization and staff to the next level. In these scenarios, the buyer is just as important as the money offered.
If this expectation is not discussed in the beginning and the level of its importance is not established for the buyer, a deal can fail. Many sellers will pull out of a deal when they see that a buyer's only motivation and concern is solely financial. Both buyer and seller need to be aligned and have respectable chemistry to make a deal successful.
Dishonesty — The diligence process is the most arduous of the selling process. Between the data collected and time spent gathering information, every secret a seller might have will likely be discovered. If a buyer learns of secrets through the due diligence process, it will often pull out because of a lack of perceived trust and integrity.
Additionally, if there is anything withheld and the contract is signed, a buyer will still have protections and the ability to go back to the seller for damages/expenses for what is perceived as a fraudulent deal. For example, some sellers may be struggling financially but try to hide that from a buyer. Such struggles will likely be discovered and could jeopardize a deal or see a buyer seeking significant damages. By working with the right M+A advisor, these issues can be explained and addressed from the beginning. This may help a seller achieve a successful transaction before they need to close the doors.
Lack of prioritization — We have an expression that "time kills deals." This is because a lot can go wrong when running a business, and some of these events can change interest in a deal. When we sell a business, it is based on past performance and the potential for an amazing future. What this means is that during the selling process, we need a seller to be as engaged and available as possible.
Running the business should always come first, even as a company is working its way toward a transaction. However, an owner or leader taking extended vacations or simply being unavailable during crucial times like management calls or diligence can cause significant slowdowns. Slowdowns typically create a longer process. A longer process provides more opportunity for things to go south.
Lavish spending — When a company goes to market, we work carefully to present realistic financial information to our buyers. We are also very purposeful in removing owner expenses or extraneous business expenses to get the best bottom line that we can for our seller. This translates to a higher offer.
Once an offer is received and the seller is under an LOI, it's important to retain the level of spending and attention to the bottom line. This is not the time to give organization-wide raises or purchase a piece of unnecessary equipment. Such diversion from the financials originally offered will often result in a smaller profit and usually lead to an adjustment in pricing, which often then kills a deal.
Overlooking the fine print — A purchase agreement has many small details. If these aren't addressed from the start, it can result in a seller pulling out of the deal. Examples of such details include deal structure, stock versus asset deal, tail insurance, working capital adjustments, caps and buckets, and non-competes. These should all be reviewed and agreed upon well before closing since all these items will cost the seller money. I recently had a deal almost fail because of the cost of tail insurance that was not anticipated by the seller.
Now for a few other deal killers from my colleagues.
Shifts in strategic direction — In the substance use disorder treatment (SUD Tx) world, we're seeing significant shifts in the trajectory of the industry occurring almost annually. These days, shifting has a lot to do with fears and hype around how and when to start negotiating new, value-based care reimbursement contracts with payors. This is causing leadership to examine their continuum and quality of care.
Some owners were stringently opposed to medication-assisted (MAT) just a few years ago and are now not only "MAT friendly" but opening office-based opioid treatment (OBOT) facilities of their own. Some are even opening their own opioid treatment programs (OTP).
At any rate, the hype around these value-based care contracts seems to be causing leadership to change their continuum or seek acquisitions to insulate their population health management. As a result, they are changing their minds on strategic direction quite frequently. Constantly changing strategic direction for the company is not only poor for operations, but it kills deals. Adding a new residential program, winding down a partial hospitalization program (PHP), or launching a new detox facility can all be great initiatives, but they might change the profile of the company a buyer originally intended to acquire.
As long as these strategies and significant decisions are communicated to a buyer ahead of executing an LOI, they can potentially be value-adds to the buyer's perspective. However, changing the profile of the company after signing an LOI and without previously communicating your intentions and strategic direction to your buyer can — and often does, in my recent experience — implode the transaction. — David Purinton
Failure to maintain performance — Buyers often insist on businesses they're acquiring to maintain their operations through the close date. This is often stated in the LOI. There will be a clause requiring the business to continue to generate the same revenue and profits (EBITDA, in most cases) all the way to close. This can be a challenge for owners because of the significant time and energy required to get through diligence. The time and attention required in diligence can distract owners and their management teams from attending to their business.
If the results falter before a deal is closed, a buyer can and often does try to reprice the deal (i.e., lower the price). Alternatively, the buyer can use an earnout. The idea here is that the buyer lowers the price but promises to make that up after the close if the business hits certain thresholds (revenue and EBITDA). That puts the risk of getting paid on the seller and is based on the buyer operating the business and achieving those goals.
Unfortunately, with a change in the deal structure, some sellers will decide not to proceed since the value of their company has now changed and they are being offered less money. Getting successful transactions done isn't simply about running an auction process and knowing the buyer. For an M+A advisor, it's about managing a hundred details and supporting sellers every step of the way. — Dave Turgeon
The Right Healthcare M+A Advisor Can Be A Deal-Killer Killer
While no advisor has a crystal ball and can avoid every pitfall, many of us have experienced firsthand the things that can kill a deal, and we work hard to plan ahead to avoid them. Securing the right M+A representation — one with healthcare transaction experience in your industry — can be the difference between a smooth, quick deal and one that doesn't reach the finish line.
Volume 9, Issue 11, May 31, 2022
It may seem like a no-brainer that healthcare business owners who are about to embark on a transactional journey would have considered how likely a potential buyer is to actually facilitate the close. Yet surprisingly, this idea of "certainty of close" is often overlooked by would-be sellers in potential healthcare M+A transactions.
When this factor isn't strongly considered, deals can go sideways or, even worse, completely fall apart. When this occurs, motivated sellers often find themselves in a tough spot. Beat from the exhaustion of working through an arduous due diligence process that has likely incurred significant legal and/or tax consulting costs, sellers may now find themselves feeling what we in the industry refer to as "deal fatigue." When deal fatigue sets in, it becomes much more difficult to complete a transaction. It can also lead to a decline in business performance if the fatigue extends to the company's operations and contribute to a lower sale price if performance suffers or buyers sense that fatigue has affected leadership and staff.
Keeping Certainty of Close Top of Mind
What can cause a healthcare business owner to look past or not carefully consider certainly of close? We see it most often for owners hoping to represent themselves in a transaction. They may be an all-too-eager seller, receive an outlier of an offer that is far too attractive to turn down, be desperate to exit the business, or any other numerous reasons sellers may look past or fail to spot some potential red flags.
That's why certainty to close is one factor we at VERTESS keep front and center for our clients. Any successful healthcare advising firm should do the same, helping assess risks from potential buyers concerning the likelihood of completing the transaction.
Some key questions we work to answer when reviewing potential buyers for clients:
What is the acquisition history of the buyer? Is its track record indicative of its current goals and objectives for growth, and what is its appetite for continued acquisitions should it buy our client's organization? As one can imagine, this can greatly impact the equity position post-transaction should the deal structure include a rollover component.
How transparent is the buyer concerning past transactions and the acquisition value of those tuck-ins? We work with a buyer that operates a $125 million healthcare business and regularly makes small tuck-in acquisitions for geographical expansion. One technique that works well for this company when positioning itself in front of a potential seller is to introduce past business owners it has acquired who now work for the buyer and play an integral part of furthering growth. Potential sellers get a very clear picture of how this company runs a transaction process from letter of intent to due diligence and even what post-employment compensation/bonus plans look like from those who were once in the same shoes and then completed a transaction.
What is the buyer's timeline and agenda for closing the transaction? Are they outlined in detail and provided in phases to better manage the process? A 60-day close is quite aggressive and unlikely, but we have seen such a tight timeline proposed and executed. If a buyer has suggested speedy due diligence, it should be well planned and executed to avoid any delays.
Assessing Certainty of Close
Different buyer types transact businesses in various fashions. Some execute more relaxed transactions. For others, the process is more daunting. All types of buyers close transactions, but some are more likely to do so than others.
Let's look at some of the most common buyer types you are likely to encounter when it becomes time to sell your company and how you can help identify their certainty of close during transaction negotiations.
Private Vs. Public
An important consideration is whether the organization looking to acquire your business is privately or publicly held. Both can make for perfectly well-equipped buyers, but there are several things you will want to consider and understand before making a choice.
Private companies aren't beholden to shareholders and thus are typically nimbler in their acquisition approach — assuming they have completed acquisitions already in their portfolio. If they do not, this would be a time to be concerned about their certainty of close. The first acquisition for an organization growing is almost always the most difficult because the buyer has yet to fully iron out its process and internal transition strategies. This doesn't mean their twelfth acquisition can't be just as difficult, but, by then, they have ideally built a well-oiled M+A team and can move through due diligence and purchase agreement negotiations quickly.
Publicly held companies, for the most part, have excellent M+A teams and regularly acquire businesses. Their certainly of close can usually be judged easily from afar, as can their typical valuation modeling, which is public information.
Strategic Vs. Financial
If you're dealing with financial buyers in your transaction (e.g., private equity groups, family offices, search funds), it's important to know whether they are funded with committed capital or will need to go out and raise funds for the acquisition. If the latter, tread lightly. These buyers often offer a higher EBITDA multiple because they know that to be aggressive and have a chance at securing an LOI against already successful acquirers, they'll need to put forward a strong offer.
You likely want to avoid engaging a buyer who must "shop" the deal around to outside capital providers — no matter how attractive their offer. Due diligence is already a lengthy process. Don't risk extending it and then having the deal fall apart due to an unfunded buyer not securing the funds needed at the eleventh hour.
Achieving Certainty of Close
When it comes time to exit your business, working with an advisor that can help effectively run the sales process and bring in qualified buyers with sophisticated organizations — and hopefully internal acquisition teams — is the best way to avoid pitfalls and get you to certainty of close. There are far too many ways for a healthcare M+A deal to fall apart, but engaging with a buyer that lacks the expertise or capital to successfully complete a transaction shouldn't be one of them.
While no healthcare M+A advisor — not even VERTESS! — can ensure certainty of close, what we can do is best ensure success by helping sellers prepare their business for a sale, vet potential buyers, and keep the transaction process moving forward. In most cases, this leads to a successful sale — one that rewards owners for their many years of hard work building a business that others want to own. Please reach out if you'd like to learn more about the VERTESS process and how we are likely helping companies just like yours achieve their certainty of close.
Managing Director Alan Hymowitz was asked by Axial to participate as one of 5 healthcare-focused deal professionals to talk about shifting dynamics in the healthcare M&A space. Other topics of conversation included the changing operating structure of healthcare businesses and how wages and employment challenges are impacting deals.
FORT WORTH, Texas, May 18, 2022 /PRNewswire/ -- VERTESS, a leading healthcare mergers and acquisitions (M&A) advisory firm, closed out a strong first quarter of 2022 with three transactions. Managing Partner Bradley Smith commented that these were noteworthy successes given the current status of the economy and the geopolitical instability overseas.
Brannons Rental and Sales, Inc., a California home medical equipment company was acquired by Adapt Medical, a national home medical equipment company. Robert Villalobos, Managing Director and deal lead, noted, "Brannons Medical was a staple in the San Jose community for 20+ years. With the continued appetite for respiratory providers, it comes as no surprise the family-run business was a desirable acquisition. I was honored to help them reach a successful transaction with Adapt."
United Medical Providers, Inc., a national urology and catheter provider, was acquired by Home Care Delivered, Inc, a national medical supply provider. Managing Partner Bradley Smith, who represented United Medical Providers, stated, "I am thrilled to see UMP complete this transaction and exit their business. We found them the right buyer that will be able to successfully continue the work they were doing."
PAIS, Inc., a West Virginia-based intellectual/developmental disabilities service provider, was acquired by Pathways Health and Community Support, LLC, a national behavioral and mental health services provider. Dave Turgeon, the Managing Director who advised PAIS, was pleased to help them find a home within Pathways and lead them through the transaction process.
For more information, please contact Robert Villalobos, Bradley Smith, or Dave Turgeon at 336689@email4pr.com or 2023031621.
SOURCE Vertess Healthcare Advisors, LLC
Rachel is unique as a Mergers & Acquisitions (M&A) Adviser: she owned and operated Lifeshare, an IDD services business, for 18 years before joining Vertess. Check out her practical and powerful advice for ABA owners considering a sale. Enjoy kind listener!
FORT WORTH, Texas, Feb. 14, 2022 /PRNewswire/ -- VERTESS, a leading healthcare mergers and acquisitions (M+A) advisory firm (https://vertess.com), announced today that seasoned M+A professional Anna Elliott, who specializes in high-growth, healthcare technologies such as Deep Tech, SAAS, Artificial Intelligence, Machine Learning, and Ambient Solutions, has joined the company as a Managing Director and Partner.
As a specialist in healthcare for her entire career, a key area of expertise for her is to appeal to healthcare technology firms and industries that are growing or merging. Anna is skilled in microtargeting related to needs and opportunities throughout the entire process of business' supply and demand. Over the past 15 years, her successes in this area have led to over $150 million in value to the organizations involved. In short, Anna is an expert in using technology to identify not only tasks that are at risk of failure but also opportunities that offer rapid, significant gains overall.
Anna previously co-founded the boutique merger and acquisition advisory firm, M&A Finders, in Pittsburgh, where she found her passion for advocating on behalf of buyers and sellers with their M+A goals. She is excited to bring her skills and network to VERTESS where she has the resources needed to expand her footprint in the healthcare industry.
"Although I experienced enormous success with M&A Finders, I realized I could help my clients even further with a deep bench of support," Anna noted. "I was so impressed by the team at VERTESS and the high quality of work they are doing. It is energizing to be working alongside this group of motivated, productive, and encouraging people who are committed to excellence."
Brad Smith, VERTESS Managing Director/Partner, commented, "We have known Anna for several years and were always impressed by her accomplishments and loyalty to her clients. We consider it a huge win for our team and our clients to have her join us. Anna's experience and achievements in the healthcare IT sector are phenomenal. As a member of Team VERTESS, she allows us to expand our reach and take our collective success to unprecedented heights."
Anna Elliott can be reached directly at 329746@email4pr.com or +1.724.900.1377.
For questions about VERTESS, please contact Vaughne Glennie at 329746@email4pr.com.
FORT WORTH, Texas, Feb. 2, 2022 /PRNewswire/ -- VERTESS, a leading healthcare mergers and acquisitions (M+A) advisory firm (https://vertess.com), announced today that Gene Quigley, an experienced executive with several healthcare organizations, has joined the company as a Managing Director. Gene most recently helped lead a recapitalization process and successfully transitioned ownership to a PE firm at Home Care Delivered.
For over 20 years Gene served as a commercial growth executive in several PE-backed and public healthcare companies such as Schering-Plough, Bayer, CCS Medical, Byram Healthcare, Numotion, and, most recently, as the Chief Revenue Officer at Home Care Delivered. As an operator, he has dedicated his career to driving value creation through exponential revenue and profit growth, while also building cultures that empower people to thrive in competitive environments. His passion for creating deals has helped many companies' platform and scale with highly successful Mergers and Acquisitions.
At VERTESS, Gene will leverage his extensive expertise in HME/DME, Diagnostics, and Medical Devices within the US and international marketplace to support clients through the M+A process as a Managing Director. Gene brings hands-on experience and knowledge to champion the business owners he represents during a transaction.
"I have enjoyed a lengthy career working with numerous large organizations," Gene stated. "It was enormously rewarding to help grow and expand those companies. To be able to take all that I have learned and experienced as an executive and work with so many new clients looking to either exit or recapitalize their "babies" is exciting. It is energizing to be working alongside the team at VERTESS."
Brad Smith, VERTESS Managing Director/Partner, said, "Gene is exactly the right combination of talents we look for in a new Managing Director. He has the insider's perspective on the healthcare industry, an enviable drive to be successful, and a positive attitude he shares with his clients and the rest of the team. I am certain there are no limits to the success Gene will achieve with his clients."
Gene Quigley can be reached directly at 329010@email4pr.com or +1.732.600.3297.
For questions about VERTESS, please contact Vaughne Glennie at 202-302-1621 or 325690@email4pr.com.
FORT WORTH, Texas, Dec. 10, 2021 /PRNewswire/ — VERTESS, a leading healthcare mergers and acquisitions (M+A) advisory firm (https://vertess.com), announced today that J. Blake Peart, a former hospital and Ambulatory Surgery Center (ASC) CEO, has joined the company as a Managing Director. Blake began his career as a clinician / Registered Respiratory Therapist (RRT) before moving into several administrative and executive positions with numerous high-profile healthcare organizations.
Blake has an extensive and diverse career in healthcare. In the past ten years, he has served as CEO for multiple hospitals of Fortune 500 companies and CEO for several large Ambulatory Surgery Centers. In addition, he has played a critical role in several M+A transactions, experiencing the entire M+A process from start to finish focusing primarily on private equity transactions. Blake's history as both a CEO and clinician provides him a unique perspective based on years of experience and empathy when working with business owners seeking M+A advice.
At VERTESS, Blake will provide M+A and consulting services primarily to Ambulatory Surgery Centers, Physician Practices, and independent hospital business markets, where he brings a level of expertise and depth of understanding rarely found in the healthcare M+A field.
"As someone who has walked in their shoes, I have chosen this path to support healthcare business owners who select the M+A direction," Blake stated. "I know that every transaction is unique and must be tailored to a seller's need in order to get the best deal. I am committed to providing a positive experience throughout the entire process. VERTESS and I are completely aligned in our goals and dedication to supporting our clients."
Brad Smith, VERTESS Managing Director/Partner, said, "We are honored to have Blake join our team. His far-reaching and respected career in healthcare provides him an advantage few in the healthcare M+A world can claim. Our clients have gained a formidable and compassionate ally in their journey through the transaction process."
J. Blake Peart can be reached directly at bpeart@vertess.com or +1.318.730-2435.
For questions about VERTESS, please contact Vaughne Glennie at 202-302-1621 or 325690@email4pr.com.
FORT WORTH, Texas, Sept. 16, 2021 /PRNewswire/ -- VERTESS, a leading healthcare mergers and acquisitions (M+A) advisory firm (https://vertess.com), announced today that David Purinton, an experienced leader in drug and alcohol recovery services as well as financial consulting, has joined the company as a Managing Director. David began his career in corporate M+A and financial advisory services with a full-service investment bank and then a consulting agency serving investment banks, private equity groups, and operating companies.
After a decade of experience as both a client of and consultant to SUD treatment providers, David was interested in improving access to high quality treatment. As a result, he co-founded Spero Recovery, a provider of low-cost, high-quality drug and alcohol recovery services with over 100 beds in its continuum of residential, outpatient, and sober living care. Spero Recovery, based in Colorado, is a residential SUD treatment environment with upscale amenities and personalized care. As its CFO, David led the company to significant revenue and margin growth while ensuring it adhered to the strictest principles of integrity and client care. After selling Spero, David remained in a leadership position with new ownership as its CFO and quickly realized accretion and integration.
While working full-time, David earned his MBA from the University of Denver with Distinction and a Concentration in Corporate Finance. As a business leader, David focused on the importance of investing in his staff and clients. He understood that the numbers on a spreadsheet represent humans, families, and dreams, which was a radically different paradigm from investment banking.
At VERTESS, David will provide M+A and consulting services primarily to the Behavioral Health and Substance Use Disorder treatment markets, where he brings a foundation of financial expertise with the value-add of humanness and care for the business owners he represents.
"As a co-founder, I put my employees' and clients' needs above my own," David stated, "and I found that the inherent values of the VERTESS team are in complete alignment. They not only have a proven track record of success, but they truly care about their clients and the people whom their clients serve. VERTESS exceeded all of my expectations with regard to a client-centered approach to M+A advisory, and I am both honored and humbled to be on this team of exceptional professionals."
Brad Smith, VERTESS Managing Director/Partner, said, "David's well-balanced background in both M+A and finance, as well as founding and operating a successful treatment facility is a tremendous asset to our team. I believe David's empathetic and common-sense approach to helping other business owners will be a game changer for us."
TBI Duluth is a remarkable story. The company is comprised of two companies headquartered in Duluth, Minn.: TBI Residential and Community Services and Pathways to Achievement. TBI Residential and Community Services provides residential foster care services, operating 29 licensed homes for adults ages 18 and up. Pathways to Achievement provides high-quality home healthcare and support services. The business serves clients with complex physical and emotional needs, providing care involving medical, behavioral, and everyday living skills.
TBI Duluth is well regarded as an industry leader in its quality of care, tailoring services to its market, meeting client needs, and continually innovating business processes. Like other pioneers in the brain injury and mental health industry, the company has been mission-based and focused on the needs of this vulnerable population. The foundation for the company's success has been the partnership of two strong women — Lori Huffman, RN, CEO of TBI Duluth, and Shawn M. Neumann, CEO — who came together about 25 years ago to make a difference in their community.
When Huffman and Neumann were ready to transition to retirement, they approached VERTESS about selling TBI Duluth. They knew about Dave Turgeon, Managing Director at VERTESS, from his history of buying companies in their space and had confidence that he was the right partner to help them manage the process and find the right buyer. This buyer would continue their mission of meeting the needs of clients and developing plans to address those needs in multiple areas as well as carry on TBI Duluth's culture, where the strengths and contributions of each team member is recognized and valued. Working with Turgeon, they found that right buyer and are now enjoying their retirement.
Huffman and Neumann took some time to discuss their company's history and success, how they knew they found the right buyer, and why VERTESS was the best partner to support them with the transition of their company.
Launching and Growing TBI Duluth
Lori Huffman (LH): We started in a time when there were few services available for people with brain injuries. It was a relatively new phenomenon. People used to die when they had these kinds of head injuries. Now they were living but had lifetime disabilities and often had needs that weren't able to be met in their homes.
Even if you've had a brain injury, you're still a complete human being in so many other ways, with your own wants, desires, and dreams. The goal for us was to help such individuals achieve those goals while allowing them to stay in their community and out of the hospital or nursing home settings. Shawn and I strongly believed in that mission.
TBI didn't open in a day. We took an entire year to research what we wanted to do. We engaged the very best in the industry to teach us, to guide us. Those were the people who became our mentors and helped us to develop our program, which focused on service-based outcomes.
Shawn Neumann (SN): When we created the companies, we understood the work required to achieve our mission. Our long history as foster care parents, experience working with behavioral health, and strong reputation within St. Louis County were extremely beneficial when entering into our business venture.
Starting a business wasn't easy. There were many difficult years. During the first five years of the business, we did almost everything. We were the online staff, the HR department, accounting department, nurse, etc. As a business owner, it was important to understand all aspects of the business. If something needed to get done, we did it. If we didn't know how to do something, we figured it out.
As a business owner, you work a lot of hours. It wasn't out of the ordinary to work 16-hour days, sometimes 7 days a week. Not everyone is willing to work those kinds of hours or dedicate that much time, but we were willing to do it. We are both passionate hardworking, caring people. Our strong personalities, leadership, and focus on our mission helped propel us through the most challenging times.
LH: What mattered most to our success was that we believed in what we were doing and why we were doing it: to help others. You must be willing to fight for what you truly believe in, and that has to be for the betterment of people. Not just your clients, but equally every member of your team. I believe you don't really need to do much more beyond that to be successful. If you have a business that always puts people first, it will likely work.
Pride in the Work
SN: I'mmost proud of the fact that we provided a loving home for individuals who had experienced a great deal of loss in their life. TBI was their home. We forged strong, positive relationships with individuals we served. We've had many success stories along the way, which made all of the hard work so worthwhile.
LH: I'm most proud of the relationships we built with the people we served. I still get text messages from clients asking how I'm doing. These are long-term relationships.
We built a caring family at TBI. We care about each other; we care about our clients. The best part of that incredible team is they grabbed ahold of our mission and believed in it. TBI is their success story as well.
Finding the Right Buyer
LH: The company that acquired TBI Duluth is very skilled and well-respected in this arena of service. They know what they're doing. We were very careful about protecting our team and worked closely with Dave to ensure we chose the right company that wasn't going to come in and disband our team to bring in whoever they wanted.
The staff and administration we have at TBI, they're solid. They've been with the company for years. They know what to do, so it was very comforting to know that the company would be in solid hands when we left. Shawn and I knew we were going to eventually retire, so we made sure we put all of those pieces in place in advance. We wanted adequate strength in leadership so TBI wouldn't miss a beat when we left.
The buyer was very supportive of keeping our team in essentially the same jobs. They didn't want to come in and disrupt everything. It gives a lot of comfort to know that you're passing the baton to a company that shares your vision and culture.
Working with VERTESS
SN: We had a wonderful experience working with Dave and VERTESS. Dave was very knowledgeable about our industry and understood the importance of finding the right buyer for our companies. He brought buyers to the table who were serious, reputable companies. He helped guide us every step of the way. Dave's knowledge, honesty, and positive long-term relationships with corporations in our industry made the entire process a positive and seamless experience.
LH: We first met Dave when he was working for a buyer. Since Dave used to buy companies, he knows how to help sellers get their best deal. When it was time to sell TBI, Dave had made such a positive impression on us that we wanted him on our side. He was great to work with then. We trusted him. I cannot express how happy we are with our decision to work with him.
Working with TBI Duluth
Dave Turgeon: TBI Duluth is quite a success story. Lori and Shawn built their business the right way, always treating employees and clients well. Their business was all about caring for others, with the sole goals of providing medical and other supports to those that could not support themselves.
Their work went beyond TBI Duluth. Lori and Shawn played an integral role in shaping policies within Minnesota and helping the state better understand the issues that providers face. In doing so, they helped payors and providers address challenges and create the systems and processes that help get the right care to all those in need. Lori and Shawn are as strong role models for young women considering a career in this space. They did great work, improved the lives of others, and profited from their efforts.
Working with companies like TBI Duluth and leaders like Lori and Shawn is why we do what we do here at VERTESS. We love working with our clients and helping them achieve their goals. There are "heroes" in our communities like Lori and Shawn who are putting the care of others first and, in doing so, building wonderful businesses that serve their communities.
We are pleased that Lori and Shawn chose to partner with VERTESS. We are even happier that we were able to find them the right buyer for TBI Duluth at the right price. They certainly earned it.
Volume 8, Issue 8, April 20, 2021
There is a struggle these days to find reliable and competent leadership. In many ways, the human services industry exemplifies the challenge. Despite an abundance of books, speeches, and guides that focus on the creation of good leaders, their absence persists.
This persistence, however, is not a result of our inability to pull good leadership from thin air. Rather, it's about our inability to simply look at the colleagues around us. Good management is cultivated, not found. This isn't a radical claim and is a concept I'm sure many are familiar with. But few, it seems, have managed to successfully cultivate new leaders. A complex reason why this challenge exists within the human services industry: gender disparity, especially for women of color. Human services is an industry that should, above all things, champion equity and equality for its clients/consumers — no question. Yet, if those same principles are not reflected in management, a company may find itself ill-equipped to champion anything.
It is important for us to assess how gender carries such heavy implications for the future of human services. To understand the future, we must first examine the present. It is reported that about 81 percent of the human service workforce is currently comprised of women. Let me repeat: 81 percent. To say that women are the majority would be an understatement.
Why, then, do leadership roles not reflect this more often? Leadership should reflect its team, both morally and literally. Remember, strong expertise is cultivated, and that cultivation should be internal. The statistics don't lie. If a company nurtured and strengthened its management and leadership team by investing in its staff, far more women would be represented. This approach kills two birds with one stone: greater representation for women and stronger leadership.
That leads us to an important question: How can you champion the women in your organization to become leaders? Here are a few things that I have learned can help strengthen a company while creating a pipeline of leaders.
1. Employee reviews.
What seems like a human resources (HR) responsibility that is often viewed as a burden by many leaders, the employee review process is a wonderful opportunity to grow and develop leadership skills in your staff while also learning about their desires for growth and development. Use regular employee reviews to provide honest and genuine feedback to help staff grow. Most people want to know what they need to do to improve, so respect them enough to tell them the truth. Be sure that the documented reviews include staff development goals as well as employee feedback and input. This will help to ensure that all employees are given a chance to grow and develop their careers further.
2. Mentorship.
Many women lack access to successful women who can serve as mentors. Meeting with and discussing your profession with someone who has been successful is incredibly helpful. Empower your staff to find a leader who can be a mentor and offer paid time off so they can meet regularly.
3. Professional training program.
I recently worked with a human services company that had an established and defined management training program. If staff indicated that they wanted to eventually grow into leadership, this program was comprised of courses they could take that would help them develop core skills for effective leadership.
Such a program can be developed internally. If that's not feasible, you can help staff find external training opportunities. Regardless of how you approach nurturing leadership, it's important to help create a roadmap for growth with those staff who hope to advance within your organization.
4. Fit positions, not people.
Many human services companies have experienced this scenario: There is a super strong team member but no position that fits their skillset, so a position is created. I can tell you from experience that this rarely works out. The company usually outgrows the person, and the position is not as valuable in the future.
Rather, it's better to put such a person in an existing position and help them to learn the additional skills required to effectively fill the role. I remember hiring a young college student for my human services company's front desk receptionist. As she completed her bachelor's in business, she proclaimed her desire to work in HR. Since our company was in its infancy, I was the HR department, and it was clear that we would soon need a larger team. So, she started assuming some of the HR tasks and slowly grew into the position. She not only decided to continue her college education and earn her bachelor's in HR but eventually became our vice president of HR and built out our department to align with the company's growth.
5. Networking.
The interesting thing about human services organizations is that many are founded and operated by women. I have worked with multiple owners who are women. They are not only the CEO but have worn every hat during the growth of their company. These women often lack a business background. Rather, they are therapists, nurses, or teachers who have stumbled into the needs of the industry.
When I meet these women, I try to introduce them to other women in their industry since they are often are the best support network out there. If every woman who is an owner or in a position of power took the opportunity to support and network with other women, imagine the leadership that would develop.
6. Invest.
Invest in your staff. Pay them as much as you can afford to and provide them with paid opportunities to grow and learn. I have been consulting with a company owned by two amazing women and I see how they do this often. They have brought in multiple training opportunities as they professionalize their senior management group. They often ask their teams what trainings would be most valuable and then provide this education. Such an approach shows staff that you are investing in their success and desire to learn while helping them be better at what they do.
7. Flexibility.
One thing that this pandemic has shown many of us is who can get the job done from home and who needs an office setting. Many people are thriving in this environment that holds staff accountable for their responsibilities and the work they complete as opposed to the clock-in-clock-out mentality.
Rethinking how we evaluate job performance to focus on goals and tasks instead of time at the desk is a great start. Most women in the workforce have the primary responsibilities at home, causing further stress on developing into a male-dominated position. Providing the flexibility for staff to work from home when needed or make up missed hours at alternative times can not only help the job get done but will create a more dedicated workforce that respects an organization that supports staff and understands their professional and personal needs.
8. Growing.
Whether through organic growth or acquisition, the larger your organization becomes, the more opportunity exists for professional movement. When I have helped smaller organizations sell their business to larger entities, I often point out the new opportunities for growth and development of staff. It's always good to explain to your staff that your motivation for growth is not purely financial, but that those additional funds help to strengthen the organization to provide more opportunities for staff growth.
Closing the Gap, Reaping the Rewards
According to a LinkedIn study, the leadership gap is the biggest talent challenge that organizations are facing around the world. Eighty-six percent of companies are calling it "important" or "urgent," and an astounding 85 percent of executives report that they are "not confident in their leadership pipelines."
We cannot sit around and simply hope that the leadership gap that exists in the human services industry will close on its own in. This will not happen, and we will be wasting valuable opportunities to better our companies and the industry as a whole. Women-owned businesses account for 42 percent of all businesses (50 percent of whom are women of color), so if you can't find support within our industry, try looking outside of it. If human services leaders work together, support one another, and champion the abilities of their staff from early in their careers, we should be able to fill the gap and create some amazing female CEOs.
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