E144: Dawn Bloomer Helps Service Professionals Plan and Execute Successful Exits

[00:00:00] Ronald Skelton: Welcome to the How2Exit podcast. Today I'm here with Dawn Bloomer. She's a business strategist, a prior veterinarian, I believe, right?

[00:00:06] Dawn Bloomer: Yup. 

[00:00:06] Ronald Skelton: Cool. And you, you help all kinds of service professionals and, businesses, plan their exit and exit successfully. I think we're going to have a great conversation.

[00:00:14] We've been chatting for longer than normal, our pre show thing. We were just like having a great time. So, it's fun to actually turn on the mic and welcome you onto the show. 

[00:00:23] Dawn Bloomer: Great to be here. Thanks so much for having me. 

[00:00:25] Ronald Skelton: Awesome. So let's do this. Let's do the origin story We always do this at the beginning to get people related to you kind of know your background. And how you ended up in the mergers and acquisitions. I'll continue with my favorite joke which is you were born and then you ended up on a show about mergers and acquisition. Can you fill out the gap in between for me?

[00:00:43] Dawn Bloomer: Sure, I mean that's it's a big gap. So I won't go too far back. But when I was six, we lived in England and I learned how to ride. And that was when I decided I wanted to be a horse doctor. That was my goal for the, my life going forward from there. And so, many years later, I actually pulled that off.

[00:01:00] I became a veterinarian and I worked in a practice that looked after just racehorses. So I was a racehorse veterinarian for over 20 years. And along the way, I was fortunate enough to join a really well established group practice that had three partners at the time, and they invited me to buy in just as I was having my first child.

[00:01:23] So I thought that was like, life was great. Right here, I had a new baby and I was buying into this amazing practice. So basically that was my first time on the, on the buy side, if you will. And of course there were a lot of negotiations, but I was, I knew I wanted to buy in. I'd been waiting for them to ask me.

[00:01:42] And so I was really just excited and probably didn't do nearly as much due diligence as would have done my financial situation justice. So I became a partner a couple of years later. I had my second child. And so I was a really busy person throughout all that. So I was working six, seven days a week.

[00:02:01] But I was still really in my happy place because I was doing what I loved. I felt like I was doing good things for my family because I actually took my kids to work with me from the very outset. And so, you know, I sort of felt like I had it all. And then fast forward as my kids started growing, I was so busy that I was starting to miss out on some things.

[00:02:24] And so I actually decided that at some point I knew I was going to want to sort of transition into doing more business consulting and less veterinary practice. Cause I knew that I could figure out a way to make the hours a little better and spend more time with my family. So I got my MBA in the mid two thousands.

[00:02:41] And that was also really helpful because our business at that point, we'd survived the sort of 08 financial crisis, if you will. And in fact, in our industry, because we were dealing with a lot of people who had, disposable income, the sport of Kings, we had a little bit of a delay before it really hit us.

[00:02:58] So it was really helpful to have that additional business acumen as we started to move forward with our business. Cause I could see the writing on the wall, things were changing and we really needed to adapt. So, fast forward a number of years later, at this point, one of my partners had left on disability, another partner had decided to retire, and there were two of us left.

[00:03:22] And we really didn't have much of an exit strategy. I think like a lot of professional services, practices, the challenges, the younger people coming up beneath us, had huge student debt, weren't necessarily desiring to buy in and spend a bunch of money to buy into a well established, practice that was honestly, it would have been expensive for them, right?

[00:03:45] And so we didn't really have an exit strategy. We hadn't talked about it. We had shareholders agreements that we hadn't looked at since I bought in, 15 years earlier. And we just really didn't have a plan. And so the one thing I knew was important was that we needed to have the business running as, as leanly and well as we could.

[00:04:04] And so we worked very hard to make that happen. And then we were approached by, a group of practices that had already merged together. There were about 30 something of them and they were, looking to expand further and they invited us to join them. So that was my first time on the sell side of the transaction.

[00:04:23] And again, I think we were a little smarter this time. We spent a little more time on negotiations, but we didn't bring in, we knew kind of the people we were getting involved with, right. So we didn't bring in like an outside advisor. We had a lawyer and, we had our accountant look over some stuff. But we did the negotiating ourselves and, we thought we were smart people and how complicated can it be? 

[00:04:45] Turns out it can be really complicated. So, I think I would say that in my first and second time around, I was definitely sort of the poster child, maybe for how you might not want to go about it. I think I learned a lot. The learning curve was really steep.

[00:05:00] But thankfully we joined this group and a lot of super smart people in there that had done this stuff before. And I was fortunate that they invited me to be part of their acquisitions team. And so I got this amazing opportunity to talk to practitioners all over the world about their, their businesses and, inviting either they would approach us or we would approach them.

[00:05:26] And so I learned a lot from that. And then eventually we grew to a point where, a much larger aggregator acquired us and that's when, I sort of had another opportunity to see the, sell side, if you will. And so that's the long and the short of how I got involved. What it did for me though, is it really got my juices flowing about a bunch of stuff, but really the big thing was, how underprepared practice owners are, for selling their business or even for preparing their business to be sold. 

[00:05:58] Ronald Skelton: I have a little bit experience in this. Very minor, but, we were doing a roll up in the marketing industry and as it started to finish up, I was helping people facilitate, what's called a sell lease back on the real estate side.

[00:06:12] I had built a team at new, institutional investors that would buy and lease back real estate to individuals. And I still have a team like that, but it's a different team. That said, she brought the original person that was helping me with that team was specialized in the medical area.

[00:06:27] And she brought a group of investors that wanted me to do the analysis on doing a veterinarian rollup. So I dove into it, realized that you have to set up MSOs and like, a non veterinarians can't buy it. So your market's tighter because you can't just sell to any acquisition entrepreneur, you can't sell to just about anybody.

[00:06:48] They either have to already have a veterinarian's license in most states, or go out and set up a separate organization in a different way of managing it. Those aren't cheap, but they're not outrageous. The research I did was about 25, 20 to $25,000 per state. And you got to set one up in every state that you buy a practice in.

[00:07:05] Dawn Bloomer: Yeah. And I think your point is really valid and that's true across a lot of professional practice types. And it's a great point. There is a select number of buyers out there for what you're selling. And, so you really have to be prepared. You really need to know what the buyer is looking for, what the buyer is going to want and be prepared to give it to them.

[00:07:24] Ronald Skelton: The reason I didn't move forward is this investor group was willing to fund it, which is a great thing to have, right? Hey, you go out and find the deals, we'll fund the deals. And they were, they hadn't built the operations team in. And my biggest concern was, is like, look, most of these veterinarians were never taught how to operate a business and you guys are all business guys.

[00:07:42] You're going to see a lot of things that are out of normal. I already kind of knew this cause I just seen it in other industries where like I have, I bought a small pest control company, was looking at others. And a lot of these guys, their books are on paper. They just been doing it so long that, the cool QuickBooks didn't exist when they started and they just never moved over to it.

[00:08:01] My concern was like their operations team would have had to been top notch. If they'd have brought me in and they've been doing it for a year, they've acquired 14 of them and they had the team vetted, I might've jumped on that. 

[00:08:14] Dawn Bloomer: That was smart because, because you nailed it.

[00:08:16] The challenge for professionals in general is that we are so highly trained in our profession. And I think it may be starting to shift a little bit, but most professional service, most professional schools do not teach you how to be a business owner. They don't teach you anything about running a business.

[00:08:32] So you basically become an entrepreneur by accident. Frankly, I don't even think I realized I was an entrepreneur until much later in the game. I never really thought about what it meant. And so the problem is the solutions we come up with for making our business better and stronger usually involve us just putting our head down and working more and increasing the top line.

[00:08:55] We're oblivious, but honestly we get so caught up in that. Everybody talks about the hamster wheel and it really is like that hamster wheel of doing more stuff to make more money. And yet at the end of the day, what you have is not necessarily that much greater because it's not been done in a way that's really deliberate.

[00:09:14] Ronald Skelton: The funny thing was, is I had a, had a vested interest in, internally that, I love animals to start with, but my daughter's adopted that. I almost call it a weird thing with animals and small children. I just, they can lick with me. 

[00:09:27] I mean, there's a deer that comes by here and I feed it by hand and everybody thinks it's freaky. I feed the ravens and they follow me around in town and like, well see me in town. Like I was in town I was getting something notarized and a raven flew over and dropped a walnut right at my feet.

[00:09:40] And I was like, Oh, Hey buddy. And I walked over and cracked it for him and I walked away. And the guy that was notarizing things was like, did that bird just really drop a walnut on the ground for you? And I was like, yeah, it's probably having a hard time cracking it. It's probably one of the ones I feed at the house.

[00:09:52] He posted about it in one of the local blogs. So you're like, there's a guy here that like, the Ravens in town know him, you know. 

[00:09:57] Dawn Bloomer: And that is, that is the flip side. What's interesting about veterinary, on a tangent here, what's interesting about becoming a veterinarian is I think a lot of us get into it because we love animals.

[00:10:07] And we don't realize how much of it is really a people business. In addition to the, watching the, the struggle with the animal suffering and sometimes no matter how hard you work, you can't fix them. That's actually why I felt I couldn't be a doctor for the same reason. I was like, Oh God, I mean, how would you deal with not being able to fix people?

[00:10:25] But it was, it's almost worse with animals because they're, it feels like they're helpless. But it's, it's interesting, it is so much a people business.

[00:10:34] Ronald Skelton: It is. You take care of the animal. You're the animal's doctor and the person's therapist.

[00:10:38] And that's what I told her. I said, you know what? I don't like people that much. I like my people, really smart entrepreneurs and stuff like that. But your average person I could do without them a little bit.

[00:10:48] Dawn Bloomer: I'll tell you what, it's a really, being a veterinarian is a really, I really admire the people who, especially now that I'm not doing it, I can say this, but it's a really hard job.

[00:10:56] I admire people who have the ability to do it without being consumed by it. Because it's, it's hard not to be consumed by it on all levels. 

[00:11:05] Ronald Skelton: The other thing I noticed and one of the reasons I didn't jump into it was, is because, and it may have changed this, it's two years ago now. So the reason you get into roll ups is there's usually a multiple gap. You can play multiple arbitrage, you can buy things at Two, three X and sell them at 10, 15, 20 X, if you got the right strategic buyer.

[00:11:23] There's always that, that's your home run lottery ticket, but you can sell it for, you can buy it at two to three X and sell it for six or seven guaranteed. And then every once in a while, if you can line up at the right strategic buyer, you could just hit a freaking home run.

[00:11:35] I didn't see that inside of the veterinarian because there just wasn't, now there is, there's a couple of good big size companies doing veterinarian roll ups, but I couldn't find them at the time. Like, okay, where's my, where's the home run, right?

[00:11:47] Dawn Bloomer: And it's, you're right. And it became kind of a crazy market, for a little while there. 

[00:11:52] Especially during COVID, ironically, because I think there was such a run on pets. Well, a lot of people were adopting or getting a pet during COVID because they wanted the companionship, all the things. And also I think there are not a lot of places where that type of, like the thing about veterinary medicine is that it's pretty constant.

[00:12:16] People are going to get their pets taken care of, even in lieu of taking care of themselves often. Which is sad, but true. And the returns compared to a lot of things you can invest in are pretty safe and, and pretty consistent. So I think that's why a lot of the PE groups like to get involved.

[00:12:36] Ronald Skelton: They're starting to now a lot in the last couple of years. Especially they started this to open their eyes to it. That and it's less like, in the medical profession, you're always dealing with insurance companies, which are always trying to, nickel and dime you and not pay you as a professional, right?

[00:12:49] Dawn Bloomer: Yes. 

[00:12:49] Ronald Skelton: Well, you did this procedure, it wasn't qualified. In the veterinarian service, pretty much you're paid up front, or if you're a little soft you take payments over time on things. But because there's not that insurance thing there, you're not having to chase some big bully down all the time and try to get your money out of them.

[00:13:05] Dawn Bloomer: That's right. And that is a big concern. Some of the practice types are different. That's why most of the aggregation, most of the roles have focused on small animal practices because to your point, in small animal practices as opposed to, what we would call, mixed or large animal practices or equine practices. So mixed and large animal would be, sort of your traditional rural practice where they do all kinds of animals.

[00:13:28] In those instances often things are done on account. And so, you have an accounts receivable. Issue to contend with often, but small animal practices, they don't do that generally, to your point.

[00:13:40] Ronald Skelton: Right. so you not just help veterinarians. We're really diving into this because I like animals. you were used to be a veterinarian and it's fascinating to me, but let's talk about some of the other industries that carry these same traits.

[00:13:51] Right. I would better like chiropractic is almost identical. Different animal, right? It's a different, you're treating a different animal. But it's a lot of the same business traits. The chiropractic schools really don't teach business very well. You have to have a license to be a chiropractor or you think you have to be a licensed owner chiropractic in most states.

[00:14:08] So now you have the, when you do that, you cut down the buyer's pool. I don't know what multiples they trade at. 

[00:14:14] Dawn Bloomer: Yeah. So I think, I think to your point, my experience as far as been that a lot of professional practices have the same issues. So in, in a lot of places there are regulatory issues.

[00:14:25] Certainly I think some of the biggest issues are around the fact that we don't have formal business training. And, I'm not saying that there aren't plenty of smart people out there who've gone ahead and gotten business training or have great advisors in place and people who can do it, or they brought in people to manage who are really good at it.

[00:14:42] But there are a lot who have not. And outwardly have been very, not even outwardly, but it'd been very financially successful. And that's great. The challenge is, as you know, is that at the end of the day, most of us, when we're a business owner, we're relying on our business to fund whatever comes next, right?

[00:15:01] Whether for you that's retirement or it's your next chapter in life, whatever it is you decide you want to do with that. And I think that's where a lot of professionals are really at a disadvantage because, they probably do have a financial planner and their financial planner has probably taken whatever value the business owner has placed on their business and plunked it on their balance, their personal balance sheet, right?

[00:15:25] And so they're making all these decisions about how they should invest their money and all the things and, and what their timeline looks like based on a number that's kind of fuzzy math. Because some of those businesses, and this is the thing that broke my heart when I was talking to practices that we were looking to acquire, is that people often legitimately do not understand that their business not only isn't, doesn't have any value, but really, literally is not saleable.

[00:15:51] It's only value is basically if you sold off all the assets and liquidated it. And it's heartbreaking to have those conversations. And they're like, but I'm making, millions of dollars a year. And it's like, yeah, well, you're making millions of dollars a year, as long as you are the person there in the middle of the thing.

[00:16:10] And without you, like that doesn't exist. And so I don't want to come in and buy that from you. It's that whole thing, that whole adage of, you know, I'm buying a job instead of I'm buying a business. 

[00:16:22] Ronald Skelton: That and even more so. I take my dog to, I just moved here and my dog, it was 19 years old before he left and he didn't make the trip.

[00:16:30] We actually had a chihuahua beagle mix. It was almost 19, 18, something, 19. And anyway, I took my dog to the same veterinary every time. I knew his name, I knew who it was. I knew his texts were. If I go in there and especially something like that dog was part of our family, like, getting there longer than my kids.

[00:16:46] He was my little buddy. He just followed me around everywhere I went. Took him to work with me half the time. I mean, he just literally was pretty much with me unless somebody didn't allow pets. That said, doctor goes and sells the practice and there's a new doctor in there. I'm more likely, especially since we had moved so far away from, they were 40 miles away from our veterinarian. 

[00:17:07] I went there because I liked the guy. There were closer ones. You just lose a lot of clients, I think, when, especially if you just sell without a long turnover. Almost the only way I could think that I would like, stick with the same veterinarian is if I come in there and like, okay, this is the new guy.

[00:17:21] He's working with the, you know, and they just kind of ease you into it over, two, three, four visits at least. 

[00:17:27] Dawn Bloomer: Well, and so I think you touched on a really important point. So I think that's key. And it's interesting, we keep going back to the veterinary example, even though it applies across the board, but the veterinary one is kind of special in some ways, because I think that because that's a recurring thing. 

[00:17:43] You're going back over and over again. I honestly think that we get more, a lot of us who are, animal people, we get more attached to our veterinarian who provides the service than we even do to our own doctor. Like, I don't know why, but you're right. And I think this is a big challenge.

[00:18:00] And part of it is, and I don't want to say it's an ego thing, but it probably is a little bit of an ego thing. As that person on, on the, giving side of the equation where I'm giving you advice and I'm caring for your animal, or, okay, I'm your landscape architect and I'm providing this beautiful environment for you.

[00:18:19] There is some pride of, of ownership of the process that you get when you have that special relationship with the client. The same goes for being, any kind of a professional. And I think it's very hard to pull yourself back from that and let other people be part of that process so that when you are not there or when you don't want to be there, they can take it on and still be a part of it.

[00:18:41] It's hard not to want to be that most important person in the room. Or even just the most relied upon person in the room. It becomes part of our identity. And that's where it becomes a real challenge. 

[00:18:54] Ronald Skelton: It happens in all kinds of professionals. The prrofessions you were talking about, engineering for a second there. I remember working for Lockheed Martin and we had a, you build a reputation there. We had an engineer that was so popular that the government would reach out and ask for contracts of his time.

[00:19:12] He's gone now. He had ended up with brain cancer. Guy worked till his last day. He just loved doing what he's doing, computer security type of stuff. And I can't say who he was cause he was in and out of, really high classified projects.

[00:19:23] But, they would reach out and say, we want to contract 15 hours, a month of his time to, to work on this other project. Wouldn't even tell Lockheed what it was, but they would give Lockheed a big contract. And he would disappear and work for them and stuff.

[00:19:34] It happens in any industry, but the problem with that is, is that's not transferable. Like, if you think about it, there was an architectural firm example. In Texas and the,they repaired bridges and design bridges and stuff for the city. And he's like, he gets brought in on every bid and I was like, that's because every, you've been doing this for 40 some odd years. He's in his 70s and then I said, you've been doing this for 40 some odd years or 50 years or whatever it happened to be. 

[00:19:58] When you leave, the next guy's going to have to fight for those business. Like everybody else is new on the block, right? 

[00:20:04] Dawn Bloomer: Yep, exactly. Yeah, exactly. And so the value leaves with you. And it's, it's interesting because it seems really obvious to us, but it takes some explaining and some, I mean, it's obvious once you point it out, I think most of the time. But it's very hard to hear if you haven't thought about it and it's almost like telling someone that they're, that their kid is ugly or something.

[00:20:27] It's like your business, your business makes a lot of money. Yeah, you. But without you, it doesn't look so pretty. And so there's a real, I think there's a real art to learning how to transfer that goodwill and transfer those relationships. It doesn't mean you're giving them up entirely, but you can still be really important to your practice without being integral to it.

[00:20:52] There's an art to it and not everybody's cut out for it. And a lot of people need help because they, they don't even see what they're doing. They think, Oh, I'm letting them do the thing. But you actually have to be prepared to sell your people to your customers. To be prepared to, really, convince your customers, your clients that the other person is not only just as capable, there are some things that they're better at than you are. 

[00:21:17] Might not be the same thing, but there are some things. Like there are all sorts of ways that you can work toward transferring that goodwill so that it will go with the business and it won't leave with you.

[00:21:27] Ronald Skelton: I'm a big believer in people should be transferring that identity or that goodwill or that reputation to their brand. As opposed to another individual in their brand, because then they run the risk that that guy leaves or does something different. If you transfer all your, unless the guy's the buyer, but if say I'm bringing in, I don't know, I'm a chiropractor.

[00:21:45] I've got two chiropractors that work underneath me and I'm thinking about selling later on. I start, introducing all my clients to one of the chiropractors there and not just having them see multiple people or whatever. There's got to be a way to do it, where the caseload is done by the brand, as opposed to by the individual.

[00:22:08] And, because what you, the risky run is the new guy comes in and buys this thing. If he's not one of the two guys, I would just, in that scenario, it was there. Anybody that leaves is going to take their clientele with them. 

[00:22:19] Dawn Bloomer: Well, that's the next phase, right? That's the next step. The next step is definitely to, to almost, try to sell a product instead of a person.

[00:22:28] You don't want to be selling an individual. You want to be selling the whole experience. And I think that there are a lot of newer companies now that are coming out and doing it really well. And you're right. It really is about the brand. And that's what really takes it to the next level. 

[00:22:45] Because that's scalable and that's something that anybody would want to buy. And that's, that takes a little more work, but you're absolutely right. That should be the ultimate goal. You look at some of the companies that have done it really well, like you don't care who sells you. 

[00:23:02] Now granted, it's a product, but there, there are lots of softwares as a service that are sold and nobody cares who sells them to it. They just want the experience of being part of it. Some people have done, built their communities really well that way. And that the community actually sort of runs itself. And that's really the ultimate goal. 

[00:23:20] Ronald Skelton: Yeah, I get that. And I think you could do it in almost any industry. Going back to the veterinarian services, just because that's what we were talking about earlier. I don't need to see the head vet to have my dogs get his dewormer, his flea shot and his, and his vaccines or whatever, right? Any tech there.

[00:23:37] So if you got to the point where like, you were the person in town that everybody knew that you just go in and get that done quickly and get out, it's done by a vet tech, not the key doctor. And he only has to see like really serious, issues or whatever. I think you've got a better chance at, number one, scaling. Number two, being able to sell it at some point. 

[00:23:57] Dawn Bloomer: Actually, I think you also brought up another really good point there, which is this whole idea of billable hours. Not so much in veterinary medicine, cause it's not usually how it's done, but this, this whole concept of billable hours. And I think it's something that the more that professional service providers start to move away from billable hours and look more at how they can sell something that is, packaged in a way that exactly what your deliverables are. 

[00:24:24] So you're not worried about scope creep. And somebody knows what they're paying up front. Like, I'd rather pay more for something, get it done well and quickly. Then have you drag it out over time because you need to do a certain number of billable hours to charge me enough to make it worth your while.

[00:24:41] And I think that's something that, that there are a lot of industries, there are some industries that are really starting to look at it and, and do better at accounting as one of them. There are more lawyers that are looking at different ways to get creative about how they charge. But that whole billable hours thing is, it's not something that's really attractive either because, you can only scale it so far.

[00:25:02] The only way you can scale is by adding more bodies. And we've, we are coming to realize that that's not sustainable anymore. We're getting to a point, that's a whole other conversation. We're getting to a point where people just are not going to work that way anymore.

[00:25:14] The newer generations are, are not all of them, but a lot of them are just like, yeah, I don't want to live like that. I don't want to work 80 hours a week, when I could work less and, still do other things. 

[00:25:25] Ronald Skelton: So, what's this process that you walk through? So let's just say I've actually, I just Googled something while we're chatting.

[00:25:30] Cause I wanted to see it. I was curious what the current EBITDA multiple is for a veterinary practices. From your experience. And I just use veterinary practices, but we could probably swap that out for a few others too, to see the difference. But, I'm wondering what the scale is for that.

[00:25:47] Cause that looks really high. What do you think? 

[00:25:49] Dawn Bloomer: What did you see on Google? 

[00:25:51] Ronald Skelton: On Google it's like the people also ask a little section where it's easy to find stuff. They say to tend to 18x and I'm thinking that's probably a veterinarian service that's doing more than 2 million a year. 

[00:26:01] Dawn Bloomer: Yeah. Even in the, heat of things, multiples that we were hearing about were like, crazy. 

[00:26:08] I think that a lot of that is settled out. I think that the, it appears for the moment, at least it'll come back. But I think with, interest rates going so high and a lot of that is, has slowed way down and the bigger practices, the much bigger practices, if you've got a lot of doctors and 10 plus million dollars, then maybe.

[00:26:31] But I think that's scaled way back. It might get back there. But, at some points you're, to your point, if your goal is to roll them up and then flip them again, there's nowhere to move on that, right? I think there are very few buyers. Even if (?) it's based where there are some pretty big aggregators.

[00:26:48] They're getting to the point where they're so big that their next move is IPO. 

[00:26:53] Ronald Skelton: Well, when I see numbers like that, cause that's very uncommon. I automatically, cause like, that's like a SaaS type of number. My first indication is I better check and see what they're call-in standardized because it's probably is very large for veterinary practices.

[00:27:06] They're probably looking at EBITDA a million plus, right? If you got EBITDA of a million plus, maybe it range 10x to 18 X, but a lot of these practices they don't. A lot of these veterinarian practices are, they're making a hundred, or making 200, 300,000, $400,000 a year.

[00:27:23] And I was expecting to see kind of industry, the standard, like of, of other smalls, 2X, 3X, 4X.

[00:27:30] Dawn Bloomer: That would be more realistic for the size that you're talking about. 

[00:27:33] Ronald Skelton: Okay. I was just curious if I was in par. So there is an arbitrage game, right? There is a rollup game. The rollup is, just call it 4X, 4X to 10X is at the minimum, is a heck of a multiples game if you play the rollup inside of this.

[00:27:47] I bet if I did the same thing for chiro, curiosity here. 

[00:27:51] Dawn Bloomer: I think what we're going to see is I do think that we will see more roll ups happening in more industries. Not that they aren't already happening, but I think we'll see more of them for, for lots of reasons. I think that as the economy starts to settle out and I just think there's, there are going to be a lot of opportunities and all of that.

[00:28:13] Ronald Skelton: So here's the chiropractic one that came up on Google. It says 1.75 to 2.27 SDE. So when they say SDE, it's typically below a million. That's when they like, like to switch over. So that makes more sense. And I bet if you look, I bet if we dug and looked at the bigger ones, I'm trying to see if there's anything here that says anything bigger than that. So now that's the problem with all these valuation models is like, what are you basing your average on?

[00:28:36] Because when they said EBITDA, it's usually, if you see that in the last, two or three years interviewing 160 people, when I see EBITDA, I'm always thinking they probably base that off of 1 million and above EBITDA. And when I see SDE, it's usually below that. And that's where the discretion is on like the different multiples. 

[00:28:52] Dawn Bloomer: I think your point about discretion on the multiples is, a really good point because it's all well and good to say the multiples or this or that. But it depends, right?

[00:29:01] And it doesn't just depend on EBITDA. It depends more so even on all the intangible factors. And I think that's the thing that a lot of people get caught up in and that's where we're talking about, removing the owner from the center of the business. Do you say that's the owner?

[00:29:17] Ronald Skelton: Yeah. As I said, that's if your business is running perfectly. Even a model. Yeah. Yeah. That's it. That's if you worked with Don for two years, you've got your numbers right. You're out of the business. You're just showing up on Fridays and, collecting a paycheck and making sure everything's not burned down. That's how you get the top multiple. 

[00:29:33] Dawn Bloomer: Exactly. Exactly. But I think, and that seems really obvious to us. But I think it's one of those things that most people don't like most certainly, most practice owners don't realize unless they've educated themselves around this to some extent. Because they just hear the stories.

[00:29:50] It's like, oh, well. And I know this is the case, because I talked to plenty of them. And they came in going, with bright eyed and bushy tailed saying, Oh, well, my EBIT is this and dah, dah, dah. Okay. So can I ask you a few more questions? And oftentimes we didn't even get to the point of validating the financials because the other stuff just wouldn't work.

[00:30:11] Ronald Skelton: I interviewed a minimum of six months now. I think I interviewed a broker out of Florida and his job, he was working for the PE guys. And basically his job was to find veterinarian services and, auxiliary businesses. Like, custom pet food, just things, things that you could put in a veterinarian service and upsell, right?

[00:30:31] Gourmet food products and that type of stuff. And, one of the problems he brought up is like, one of the things that's slowing them down, is there just simply isn't enough people educated. Like there's not enough veterinarians coming out of school and stuff. 

[00:30:43] Dawn Bloomer: Well, yeah. So this is a huge problem right now in the veterinary space, which we keep going back to, but it's a great example of what's happening in other places too.

[00:30:52] Ronald Skelton: The chiropractic system with not enough people graduating to take care of the client load. 

[00:30:57] Dawn Bloomer: Huge shortage of veterinarians. It's amazing. And so what's happened even for the bigger. Practice groups is that no matter how much money they throw, they're just physically aren't enough people that are able to do the job.

[00:31:12] And wait, the baby boomers are getting to a point where they're getting ready to, more and more of them are getting ready to retire or, or we'll end up retiring whether they want to or not. Or we'll end up leaving whether they want to or not. And so there's going to be even more pressure going forward than there is now. 

[00:31:30] And that's something that, these buying groups are not stupid. They know what's going on and they're doing everything they can. And they do have some, there are some ways that they have some advantages that the smaller practices don't have.

[00:31:43] But, there are also some people that don't want to go and work for a big corporate group. They want to be in the smaller, high touch, personalized environment, and they don't want to go work for what they see as being corporate. So yeah. That adds a really interesting layer to it.

[00:32:00] And to your point, that's one of the reasons why it's really important to have a brand so that then you can use what is sometimes referred to as sort of the white coat effect. Where you can put a white coat on someone and plug them into the room. And because the brand is so strong, it can carry that person until they have an opportunity to develop some relationship with the owner. And they don't need to, to the same extent, because the owner, to your point, is going to keep coming back.

[00:32:24] It's also why there are a lot of new practices that are coming out now with, sort of concierge subscription service models. As they are in human medicine. Like we're seeing this a lot in human medicine, right? and we can argue about the pros and cons of that until the cows come home but, people are doing it.

[00:32:39] People are paying for it. I actually talked to a friend of mine the other day that took her pet to one of these newer practices where they sign up for an annual plan. That's how they bring them in. They bring them in, signing up for an annual plan and they get certain things in the annual plan and she loved it.

[00:32:57] She said, Oh, the office was beautiful and it's really modern and they have all the bells and whistles and, the people were really nice and dah, dah, dah. Not once in there did she say anything about having, looked at the experience level of the veterinarian or, or any of that. So not to belittle the importance of those relationships, but there is a different, there are some different types of buyers out there now too, that are not always looking for the same things that we've traditionally thought they were.

[00:33:27] Ronald Skelton: Yeah. But each one of the big, you're in, you're in California. You have Kaiser down there? And it's, it's almost boutique. You go to them for everything. And it's very, you're joking. Some people don't like to hear a doctor. I'm firing mine. I've seen him one time and I never want to see him again.

[00:33:41] He's a marathon runner, bodybuilder, veins popping out of his neck and within five minutes he was fat shaming me and, and just tearing into me and talked down and didn't listen to a word I said. Talked down to me the whole time I was there. I was so fuming mad. I was about to throw something at him.

[00:33:54] My wife actually said, Oh, we need to go. We're done here, right? Cause she could see how mad I was in the room. And it was everything I could do not to tell the man off. I was trying to be respectful.

[00:34:03] Dawn Bloomer: That's interesting though, because that actually brings up a really important point about culture. And this ties into brand. And so I think that, if obviously Kaiser is such a big system. I don't know what their checks and balances are in place for how they manage their.

[00:34:18] Ronald Skelton: They won't blink an eye when I switch doctors. 

[00:34:20] Dawn Bloomer: No, they won't. They don't care. Cause you're, you're locked into their system anyway.

[00:34:24] It's not going to change their bottom line. And that guy will be for somebody, it might not have been for you. But if you're not Kaiser, if you're not Kaiser and you want to create a brand that is attractive to your clientele, I think it's really important that you have all of that stuff kind of laid out.

[00:34:41] Like who are you wanting to serve? Like, who are your people? And cause you're not going to be for everybody, to your point. Like that guy's great probably for some bodybuilder dude who wants to, but so when you are looking at your business, who are your clientele? Who do you really want them to be?

[00:35:00] So what is your mission? What's your vision for the future? Not just of your business, but for your brand. What experience you provide. I still think right now, especially after COVID, I feel like customer service has gone by the wayside. And we are so desperate to get out and do stuff. We don't care if we get crappy service.

[00:35:19] We're just like, I don't care. Yeah I'll pay the extra tip. Throw the tip in there. We tip it for everything now. Like it's crazy. And we get terrible service because we feel bad because we know they're understaffed and they have little signs of saying, we're understaffed. I think that there's so much opportunity in there for, service providers to just go back to giving great service.

[00:35:39] I think you can charge more for it. People will pay for it. I think there's so much opportunity there. Cause I think people are starved for just good old service. 

[00:35:49] Ronald Skelton: I laugh because, well, after COVID was over, like towards the end, they're still making you wear a mask inside of the doctor's office.

[00:35:55] I was in Oklahoma and I have the VA, I have other medical insurance, but I went to a particular doctor cause he was recommended to me. They didn't tell me how he practiced. But I went to them for a particular pain management cause I was getting off of pain medicine from a car wreck. And, I go in there, I do all that.

[00:36:11] The nurse checks me out and does my thing. And when it's time to see the doctor, they wheel in this laptop, on a cart. And lift up the laptop and here he is on the screen. And he did the whole thing on the screen. And I figured out he hadn't been to the office since COVID. He figured out he liked working from his kitchen table. And all he's doing, like anything he needed to physically touch somebody, he had a nurse do, and he would get on there and ask you some questions and like okay.

[00:36:34] I'll send the prescription over to the pharmacy. He would do it from his house. They don't hand you a prescription. They just send it over to the computer. And, I kind of first was like, wait a second. And then I was like, well I get it. I didn't need to physically see the guy. 

[00:36:48] Dawn Bloomer: And I think that's another thing that's really interesting because I think that, that's another, I mean, brilliant, right? Like talk about arbitrage. I think there's going to be so much opportunity in leveraging technology for these things, because the reality is as time goes forward, things are just going to change exponentially in that realm.

[00:37:05] There are going to be so many more things within the internet of things where wearables and all these things can monitor stuff constantly. And you can hop on a, like a telemedicine visit from your phone. And it doesn't mean you're not getting great care. It just means you didn't have to get in a car and go do the thing.

[00:37:20] And they didn't have to leave. They're happier. Like I want a doctor who is not burned out. I remember a number of years ago, I thought, Oh, I should have a doctor a little closer to home. So I went to, our local network or whatever. And I thought I did a pretty good job of going through and, and finding a doc.

[00:37:37] I found one that was younger and I thought, Oh, this would be great. She'll be a little behind me. So I go in for my first appointment, we're chit chatting and she's heard that, my background and stuff. And she's like, I said, so how do you deal with all this electronic medical record and, burnout. And did as she goes, Oh, I'm completely fried.

[00:37:52] I've already gone down to working part time. It just doesn't make sense. I don't make enough money to pay for the, for a full time nanny and it's so stressful and I'm missing out. And I was like, Whoa. So I think that I'm excited for figuring out how to use technology to leverage some of this stuff. So that our providers are not being overtaxed and that they can bring their full selves to our appointments. I don't care where they do it from. 

[00:38:20] I mean, it's, all the technology now is making it easier. Like if you think of Architects, like, another one that I think would be along the same as be like interior designers, right?

[00:38:31] I don't really need to pay you for the trip to come to my house to look at it, to see what needs to be done when we know everything can be done virtually online. Like, this is the thing where I feel like a lot of, a lot of professions could be looking at different ways that they can leverage, leverage technology. Make the quality of your life better so you can make the quality of your clients and customers lives better.

[00:38:55] And technology is just improving so quickly that it's hard to even keep up. So I can't even imagine what it'll be like in a few years. I think that one of the places where hopefully they're going to make more progress quickly is, in all the healthcare fields is the electronic medical record and the electronic health record. Because it is such a source of burnout and, and stress for our healthcare providers and, and time and all the things. 

[00:39:23] Ronald Skelton: I think the fastest when AI is going to have is when we allow it to look at all our, like I get blood work because the VA, basically the vampires, every time you walk through the door, they take your blood. And Kaiser's not that bad, but they take it often too.

[00:39:36] If something could look at that over, like look at every, every test result instantly over the last 15 years, they could actually detect things so much faster. Vitamin levels, changes.

[00:39:48] I think there's just certain things you couldn't see with a human eye that software can do. There's a huge potential that now there's a risk. Yeah. They could use it against you too, right?

[00:39:55] Dawn Bloomer: Yeah, sure. And I think that, and that's always going to be the challenge. I think though, we're getting to a point where the reality is we don't have nearly as much privacy as we'd like to think.

[00:40:03] Ronald Skelton: I have a friend who flies around and teaches chiropractors how to do hands and feet. He, just expand their business. Like I said, it's another revenue stream. A lot of people don't know how to adjust hands, feet. And he's really good.

[00:40:13] I actually had what they call plantar fissure. I just had a big bone spur in my heel and it hurt so bad to walk. And he was retired at the time he'd sold his practice, but I knew him. I was friends with him and his wife. His wife is a brilliant marketing person. She's a multimillion dollar earner and one of the multilevel marketing companies.

[00:40:27] And that, that says something because not everybody hits that level. That said within about probably three, four weeks, he adjusted my feet and it's never came back. Basically my feet were out of alignment causing the tendons, to hurt. But he travels around. I think there's a good opportunity to partner up with someone like that.

[00:40:45] And I was like, let's teach these business owners how to create a business and how to make it sellable. Cause he sold one before. He sold his previous one and then he built one or bought one and he's back into the business too. So he does both chiropractic work and, or maybe he sold it again.

[00:40:59] But, I honestly think that like, I keep going back to these doctors and stuff, but even legal professions, there's just a pretty much, if your job or your business is centered around you, there should be a school, like, operator to entrepreneur school.

[00:41:14] Dawn Bloomer: Like a lot of it involves, you have to separate your role from your identity, right?

[00:41:19] So what you do is not who you are. And very much our business becomes who we are and, and what we do in it becomes who we are. Like when you walk into a, a dinner party or something or whatever, and somebody says, Oh, what do you do? Like, you don't roll out, Oh, well, I'm a mom and I'm a, it's like, well, I have a business and I do this and do that, right?

[00:41:38] And so it's getting, learning ways to shift that thinking a little bit.

[00:41:43] Ronald Skelton: Thought about hooking this mic up to a, hooking a mic up to a porter recorder and just go up to people and like the city and go, Hey, my name's Ron. Who are you? 

[00:41:49] I'm just asking people who they are. But I think it would be cool to walk up to people with a microphone and just say, I'm Ron, who are you?

[00:41:56] And see what they say. I almost bet you, I would imagine 80, 85 percent of people when ask who they are, they tell me what they do. Instead of saying, I'm Don, they would say, I'm Don, I'm a chiropractor. I'm like, when I say, who are you? I kind of asked for the identity.

[00:42:11] People immediately want to say they're a doctor, dentist, lawyer, software engineer or whatever. And I used to do it all the time. And, it's interesting that people tie their identity, whether you own a business or not to what you do on a daily basis. 

[00:42:24] Dawn Bloomer: Well, and I think that's, it's one of the reasons why I think that this whole idea of work life balance is whacked. I mean, first of all, if you love your business, great.

[00:42:33] Then it's going to be a big part of your life. And I think that rather than looking for balance, it's important to look for ways that we make sure we're paying attention to all areas of our life, right? Like, so you've got your business, you obviously are still doing self care. Like you're, you're doing stuff with your family.

[00:42:48] You're doing all the things. It's not two things. It's not like work over here in life over here. Like it all in our,it all has an interplay. And I think that it takes some of the pressure off this idea that you should be able to just have all these, these things where, you turn it on, you turn it off.

[00:43:03] I don't think it's realistic. And I think when you're chasing unrealistic goals, it's just an exercise in frustration. So I talk a lot about integrating your work with the rest of your life. Very important that you pay attention to those things. And one of those is making sure that you're identity isn't too tied up in your business. Because I think it's another reason why people delay planning their exit is because they're like, well, I don't know what I would do if I wasn't doing this.

[00:43:27] I think it's one of the reasons people struggle in traditional retirement. And so many people are going back to doing something else. Cause they're like, I don't know how to be me. Like who, who am I? Who's my mother? It's like that book when you're a kid. So, I think there's, there's a lot tied up in that.

[00:43:44] And that's what makes some of those changes difficult for people is that, it feels very personal to be saying that, what would I do next? And it's really important to know, what's really important to you. What are your values? What matters to you? Because that helps you figure out what your business should be doing for you. And so just what you're doing for your business. 

[00:44:06] Ronald Skelton: One of the things I want to cover before we go is what is the timelines? If I'm a dentist, lawyer, I'm trying to avoid veterinarian because we talked about it a lot. But I'm a dentist, lawyer. I own an engineering firm that centered around me. What are some of the other ones? Chiropractic.

[00:44:19] Just any of the things out there where you're the soul of the business, including veterinarian. What does the timeline look like? When should they start contacting you? I understand in, in most brick and mortars, it's a two or three year process, but even sometimes a brick and mortar is a little more lean towards, they've got some of this stuff right already.

[00:44:36] They already like new standard operating procedures and some other stuff to where I see, at least in my experience, I think it's a lot of these others, they just don't have any of it. They don't have any standard operating procedures. They don't have, systems processes.

[00:44:48] They don't even have formalized accounting the way they should. Right? 

[00:44:51] Dawn Bloomer: They don't. A lot of them do not. And I think it's a great question. And it's one of the reasons why I try not to over focus on exit planning when I, when I market? Because frankly, I'm afraid I'll scare people off because they're like, Oh, I'm not thinking of leaving for years.

[00:45:07] Great. Then let's start now. Because really, Chris Snyder from the Exit Planning Institute, what he says is he says, exit planning is just good business strategy. Is really that, that whole concept of beginning with the end of the in mind, I can give you all the, all the sayings, right?

[00:45:24] They're true. It's like, as you get older, you realize all those things your mom told you back in the day, they're true because you can't start too soon. First of all, I think it's hard to time your business exit. You want to have a business that's ready to be sold when the time, when the thing happens, right?

[00:45:41] If somebody comes to you, you want it to be ready. And so long and short of it is like years to preferably, five or 10 years would be great. Because the longer the runway you have, the more options you have. The shorter your runway, the fewer options you have as to the type of buyer you can look for and to what your business will be worth when you exit it.

[00:46:04] Ronald Skelton: I got it. I got it. I think there's a play here. We were talking about earlier about rollups and that you have to have a management, management service organization or a medical service organization. Dental service, service organization, those types of things. I think there's a play to almost have something similar to an MSO for your day to day operators where like, look, you do the doctor stuff and we'll do your marketing.

[00:46:27] We'll do your accounting and we'll do your book, your appointment setting. And, eventually, when you're ready to sell it'll all be well run and when you're ready to retire, everything will be in order. Does that exist already? Or are there companies out there that do? 

[00:46:40] Dawn Bloomer: So I do know of a few companies that do that on a small scale for various types of groups, like within an industry.

[00:46:47] And I think that for certain people that works really well. I still think the challenge in it generally is that, what they're not working on is the mindset and the, and the bigger picture, the bigger picture. And so, yes, they're taking care of some of the mechanics, which is great. But at the end of the day, if you don't have that bigger picture in mind, it's really, you've just bolted on another piece that you also have to manage and all of the things.

[00:47:13] And I think it's also hard for most owners to give up that kind of control, if you will. If they haven't already made that sort of mindset shift. 

[00:47:22] Ronald Skelton: I have some really good friends that are the doctors and stuff. And I've been asked to come in and coach them for marketing and stuff. And The problem I have with coaching PhDs in marketing, is if you don't have a PhD above theirs, they automatically assume they're smarter and won't listen as thoroughly as they possibly could.

[00:47:40] They don't realize that there's specialized knowledge in certain areas and, just have a problem with that. So I didn't. 

[00:47:45] Dawn Bloomer: Well, and I think that's one of the reasons why, I think my background hopefully helps me understand where people are coming from a little bit because I've been in their shoes.

[00:47:57] I get it. No judgment, no judgment. I've done it all wrong. I've done all the things backwards. And what I want to do is use my experience to help other people figure it out faster than I did. So that they don't have to struggle for as long. And to your point, it's true because what you don't want is you don't want someone coming in. Even if they are, do have a degree above you or whatever, you don't want them coming in and telling you how you're doing everything wrong. 

[00:48:23] You want them to help you understand how you can do things better. I try not to come from a place of judgment because I can tell you, whatever story you have, I can tell you one where I did it worse. 

[00:48:33] Ronald Skelton: So how do people reach out to you? If somebody has a, a practice or, or something that fits, let's start with there. What is your target demographic? Who do you want reaching out to you? And then we'll tell people how to get, how to get to you. 

[00:48:45] Dawn Bloomer: Sure. So I, I'm excited to work with, I work with other types of businesses, but what I'm really excited about working with and passionate about working with our, our practice owners who have a really a certain, certain level of, of success already. Solopreneurs are tough for me.

[00:49:02] I can help people who are in, already in a well established business. You've got several principles involved and, and really what you want to do is you're already successful, but perhaps you're at the point where you're overwhelmed by everything that's going on and you can do better.

[00:49:20] So pretty much any professional service practice or firm in that, in that realm. Most of them are, they're micro to small businesses. But they already have a pretty substantial footprint and they want to invest in doing things better. 

[00:49:36] Ronald Skelton: Okay. And then how do people reach out to you? What's the best way? 

[00:49:40] Dawn Bloomer: So my website is productivepressure. com and on LinkedIn and that's an easy way to get me too. But if you go to my website, you can find pretty much everything about me there, productivepressure. com and otherwise please connect with me on LinkedIn. 

[00:49:55] Ronald Skelton: And you're Dawn Bloomer on LinkedIn. I can see that. Cool. And I'll put those links in the show notes. If you're driving, you can get back when you get back somewhere safe, you'll be able to find them in the show notes. I want to thank you. We had a fun time today. I learned a lot from you and we'll call that a show.