E216: David Lynch: Building and Selling a Successful 8-Figure Healthcare Business

[00:00:00] Ronald Skelton: Hello and welcome to the How2Exit podcast. Today I'm here with David Lynch and we're going to talk everything about, growing. David started a business from scratch from his house even and grew it up and then sold it to private equity. that's one of, or, one of the things we're going to chat about and then you're actively pursuing acquisitions now.

I want to for being here today, David, and, tell us who you are and where you're from.

[00:00:23] David Lynch: Yeah, no, thanks for the invite, Ronald. So yeah, David Lynch from the UK, the North East.so sort of not quite Scotland, but quite far up the UK.so yeah, living here, family, two boys, um, and, yeah, looking forward to chatting. 

[00:00:41] Ronald Skelton: Cool. So you started a business in the healthcare sector.Let's start with that. You said you started it from a spare room or, it's the kind of the US way, we always like, yeah, they started in their garage. You literally started in, in a spare room. So talk about, talk about what that was and then we'll work our way up through how you exited it. 

[00:01:02] David Lynch: Yeah. So as I say, it was kind of a, a bedroom startup. It was in, as you say, it was in the healthcare sector and it was all around mobility stroke disability products. In particular, we focused on the handling of people. So we had hoists and slings and all different types of sort of apparatus to help get people from A to B.

Generally people that couldn't wait there.So we started out as a reseller. We were buying products and selling products. We moved into the servicing and the repair and the installation of the products.And then sort of moved into manufacturing.We sort of grew the business through our own products as well as other people's products.

And yeah, we, we also did a bit of e commerce, a bit of private, private sale stuff in the end. But yeah, it was a long, it's, it felt like a long journey. It was actually only 11 years. And when I started the business, I was 29 and I set myself a target of selling and getting out of the business by the time I was 40, four zero.

And I achieved that. Well, I missed out by one month.So yeah, I, I was due to sell, I was still 40, I was like, come on, we've got to get this deal done, but it dropped into October, which then made me 41 and, yeah, and that's actually why my new company and my new investment group is called 41 Kong, because I just turned 41.

[00:02:47] Ronald Skelton: Interesting. Interesting. So it was medical, like, like you said, devices and stuff that help people like slings and help people move around. I've reviewed a few of those. Actually, there was a gentleman in my, like probably one or two weeks after I took the first mentoring course, you and I have taken some of the same mentoring courses.

So I took the same one you took. It's always okay to hear we both have done the Harbour Club. We've, I've done Roland Frasier's. I've done other programs, but, we done that, I was trying to, the reason I did that program, by the way, is I acquired something and I did it really wrong. It was like, I better go find somebody that knows what they're doing and do the next one right. 

But, one of the cool things I got to review was, somebody referred as a guy who owned a medical devices and supplies company. Like you did disability assistance type of things, slings and things to help people move around. All they did was supply a different nature. They supplied fire rescue, ambulatory, ambulances and fire trucks and stuff with the materials and stuff they needed. So everything from like the fibulators that they have to have, when the fibulators changed from one model to another, and they're supposed to get the updates or whatever, they carried those all the way down to the bandages and stuff like that. Everything other than prescription medicines. 

Did you, you built this to, to a goal at 40 years old, you wanted to sell. Was it ready to sell or was it, were you, there's a difference between a business being ready to sell. Like it's at it's where I can take it to, right. It's ready to sell. Versus I made a goal to be done by the time I'm 40, I'm ready to sell.

So where, where do you think you were on that spectrum of the business being ready or you were just ready?

[00:04:24] David Lynch: Yeah, no, I mean, yeah. So I started to plan about three years before. And,when, when I sold, I got out and I left on day one. So, like, I remember being down at the solicitors on a Friday and I never went back. And I think that's because I put the right things in place at the right time. Your management structure was good.

Systems and processes were good. And the business just didn't rely on me. I'd set all of the contracts up with the NHS and other local authorities. So yeah, to answer your question, I would say,I plan things and it probably took us about three years to put things in place. To allow me not to be needed anymore.

[00:05:15] Ronald Skelton: Let's go back to the beginning. You started this in your, your house, right? What were the early days like, what were some of your catalysts to growth? Was it just grit? Or did you have some breakthroughs in ways to grow the company? Did you do any acquisitions along the way? Or did you just, any aha moments that really like, propelled the growth of the company and got you out of your house and into something more substantial?

[00:05:40] David Lynch: Yeah. Well, it was all organic growth. And that's the interesting thing. We can talk, maybe talk about that a bit later because I didn't know anything about mergers or acquisitions or anything. So no, I think it was, um,we did well where, where we really grew was the contracts.We won a contract fairly early, probably above where we should have.

And that was the catalyst to then grow more. So, we sort of, we conquered the northeast of England with local authority contracts. And then the challenge was working outside of that area and in the end, we ended up down, down as far as like London and the surrounding areas. And it was a case of putting that infrastructure in place to be able to do that.

So winning the contracts with the NHS was good for many reasons. And then one of the reasons we started the manufacture was to, to really drive our margin, our gross margin up, which obviously was part of the strategy of, of exit. So yeah, I would say, I would say that the biggest sort of area of growth came from winning the public sector contracts.

And it was like repeatable, predictable revenue. We, the contracts were often three years plus one plus one. So five years altogether. These things took a lot of time to put together. But if you were, if you did win them, then it's sort of then really catapulted your turnover. And that turnover was securer for, for a good number of years.

[00:07:20] Ronald Skelton: So, uh, for our U. S. listeners, when they say turnover, they're referring to the revenue, right? So, in the U. S., in the U. S., turnover is usually, like, when we're losing employees. Like, the turnover is, like, your staff. If you've got a 3 percent staff, you're losing 3%, If you've got a 3 percent turnover, you're losing 3 staff for 100.

In the UK, that's a phrase that's used for what we refer to as, uh, our,revenue, I guess would be the, the easiest way to explain it. So cool. You know, we, we interviewed people from all around the world who everybody does just things just a slightly different there. I like, you know, that it was organic.

I liked that when you, you went after the bigger contracts, right. That's something a lot of people need to hear. Don't be afraid to try to get one. The worst thing can happen to you is you get it and now you have to figure out how to live up to it. We, we do this a lot with some of the guys on the show. They go out and they're trying to buy a company and bought a company and then they bought it and it's like, Oh my God, now what, right.

It's the dog that chases the car finally catches the car. What are you going to do? So, you landed the big contract, you guys grew, you kind of knew in the back of the head, sound like you kind of knew from the start, like, okay, this is a 10 year plan. There's something to be said about having that vision and engineering a company from day one knowing this isn't the thing I'm doing the rest of my life.

This is something I'm going to build, grow, and eventually sell. I think that sets you up for a win. It really did. A lot of people work theirself into burnout and then realize it's time to exit and then they get the rude awakening that there's a three year process, two to three years of working the systems and processes and making themselves not a key person inside of the company. Making sure they're not trying to, here in the U. S. we do everything we can to minimize our tax impact. A lot of times that means you look like you're making less revenue than you really are, just because you're taking every deduction you can. Well, that impacts the sale too. So,having that vision, it's that, uh, built to sell mentality is brilliant. I think every company should do it.

[00:09:18] David Lynch: Like everything I ever touched from this point forward will be built to sell. Even if I want to hold on it to the rest of my life, just because a company built to sell is actually going to run better, right. Then just about anything else. Yeah. I think the interesting thing is really, I'd never, I'd never been in a business before. I'd never had a business. So I was literally learning on, on the job. I'd never interviewed a, a member of staff. I'd never even bought like stock or anything like that. So, you know, don't get us wrong.

There was a lot of mistakes along the way. But, I think just having that attitude, that can do attitude, and I think just, just getting started on stuff and not being afraid. And I think that's, that's what helped us get to where I wanted to be. And I think when I did sell and I sat back,you know, the money's great, but the experience you get, like it is it going through all of that.

It, you know, was, was brilliant. And, yeah, I think that the people, the people that helped me along the way, that's one of my motivations now to, to give a little bit back to others. 

[00:10:31] Ronald Skelton: I'm trying to think that the, you grew this thing from zero to, you know, you mind giving us a kind of a range of what the, the top end of it was? Like, what the turnover was, your revenue was that exit?

[00:10:43] David Lynch: It was eight figures. It was eight figures. And, and when we actually sold, and that was made up of the different components or the supply, installation and maintenance, which were the contracts, the manufacturer, of our own products. And we had like a little distribution network in the UK and some abroad.

And also a little bit of e commerce, direct sales. So it was made up of those areas. But ultimately the,the large sort of trade buyer who were private equity backed only what they wanted was the contract side. I don't think they've done a lot with the manufacturing. I don't think they've done a lot with the e commerce, but the contract side.

The contracts that we had were product, product areas that they didn't have. So it was kind of just like an easy route for them to get into what we call the patient handling arena.

[00:11:42] Ronald Skelton: So they were doing more of a strategic acquisition then, cause there were, they're wanting to buy your contracts and your,your connections with all these, uh, you know, companies and stuff.Most often it's because they have other products and they want to cross sell and upsell to them, right. 

You built something, you built an end to a market they wanted to be in. That's, that's great. They usually they pay a higher multiple too, that's usually a higher exit than just a straight PE firm that you're the first thing they're buying in that space or, an acquisition entrepreneur like one of us would go out and pay. The strategic acquirers usually will, will pay more.

So that's what we all, that's what we all hope to do, right? In the acquisitions and entrepreneur world is pick up a company like that, do a few changes to it, run it for a year or two or three or five or whatever, and then sell it to the strategic buyers because they pay a higher multiple.

[00:12:35] David Lynch: Yeah, yeah. Exactly. And they continue to do that and you know, they have brought all over Europe and I think the world as well. So I don't know where they're up to now, sort of turn of wise, but it'll be, it'll be pretty big and yeah, the healthcare does bring a, an attractive multiple. So it's definitely the right sort of sector to be in if you're going to do this, so it's sort of, organic build scale and,and sell.

[00:13:08] Ronald Skelton: What was your, during your three, four window, when you're getting ready to sell, what was your biggest roadblocks or the biggest challenges to, to get it truly ready? I imagine through the process, you weren't aware that all they wanted was the contract site. So you were probably trying to fix it all, right?

You're trying to get all these different branches and you're trying to get standard operating procedures and all that and everything in place. But, what were some of the bigger challenges and some of the things that were different than what you had expected, right? You thought you were going to do X and it just took longer or it's harder to do.

[00:13:38] David Lynch: Yeah. I think, it was, we were, our culture was very entrepreneurial and often that means, you do what you can for the customer.You go above and beyond for the customer and you, you solve their problems, but actually in the background, you're creating a lot of chaos and we certainly create a lot of chaos.

And there was a lot of human error. And there was a lot of, like, staff were probably a little bit fed up and disgruntled of always having to do last minute things.So we spent a lot of time on the systems and the processes.Getting things right, implement and software so that we could still delight the customer, go above and beyond for the customer. But we knew that we're getting it right in the background and stock was getting recorded properly.

And stock was always there when we needed it. And we weren't begging from here to, to solve this problem over here. So I think that the systems and the processes and putting that in was the biggest challenge. Because it's not just a, a factor of your time, it's, it's getting everybody on board and changing the way you do things. We had a lot of engineers going out and they started to use tablets. They had to record things in a certain way. They had to upload photographs and everything, soit was a culture shift for the right reasons, but probably not many people understood why at the time.

[00:15:18] Ronald Skelton: I get that it was a culture shift and I can see there's entire sections of business libraries written about like change and books like who moved my cheese and all that. And then people, the human,psychology, psychology's, uh, resistance to change. The process of getting people on board did you communicate to, you know, anybody early on that you were preparing to sell? Or is that something you kept to yourself until the very end?

[00:15:44] David Lynch: No, I never indicated that, but I guess what I probably did was flirt with the buy, the potential buyers. Some of my marketing activity and thoughts were positioning ourselves in a way that was attractive to the competition.So the big boys probably knew that I did want to sell, although I never said that. Until we got into the,discussions further down the line.

[00:16:16] Ronald Skelton: Yeah, when you were looking at replacing systems and putting systems and processes in, did you take a look at what the top, say, five or ten potential acquirers were using and choose something that was common amongst them? Like, I see people doing that with accounting and stuff like that.

Like, okay, everybody in our industry is using QuickBooks still. We probably should stay on QuickBooks or everybody in our industry is using a Xero. We probably should go ahead and implement that cause that's going to be a lot more appealing. Did you take a look at what your, the people that you would love to sell to, what they were using before you chose a software solution to, to put implement? 

[00:16:54] David Lynch: I think that's a brilliant idea and honestly, we didn't. We chose something, so we use Salesforce, but what, what we did and what was the game changer was we got a local software developer company to bespoke the system to us.The cost of Salesforce is very affordable. However, we spent a lot of money designing this to our exact needs. So in one respect, it was off the shelf and universal. And the other respect was bespoke to us and our industry.And, yeah, no, so I think to be fair, it was probably more advanced than what the acquirers were using at the time. And I think they've integrated some of that since, but, yeah, it's, um, doing the bespoke route was, um, was risky, and quite costly, but it was the right move and it wasn't me that sort of drove this.

It was our finance and ops director.And I was like, you know, I don't want to spend all this money on software.But you know, it was, it was the best money was spent. So now, now I champion this. Although I'm not a systems and processes guy, I champion how much that can improve your business.

[00:18:25] Ronald Skelton: Yeah. I've been through that a couple times. The, uh,I told you before we started recording, I was in the IT space for a while. One of the anti spam companies I worked for, we, they had, they wanted a new CRM for their sale guys. We built something from a custom platform that was really cool, was doing a lot of automation for them.

It was kind of a new startup. And then the new sales rep guy, the new, they hired a, a retired, famous football player. I don't remember which one it was, but he's in sales now. He's some famous quarterback from years and years ago to be our director of your vp of sales. And he said he wouldn't take the job unless we moved over to salesforce because that's what he knew. So i'm familiar with it.

It looks cheap or affordable on the front, but the implementation of customization of it, was even then this is 2000,probably five or six. I don't remember maybe earlier, maybe 2001 to. But, uh, even then was tens of thousands of dollars to, 50, 60, $70, 000 to get it customized for a company of a hundred. At least they didn't have a huge, what I jokingly refer to as confusion soft, right?

Infusion soft was the one of the ones out there that a lot of sales guys liked. And that sells automation and stuff. And that was insanely confusing and painful. I've implemented that one too. So you, you got your systems updated, you got people doing that. How long did the people, you said it was a culture shift and a, a resistance to change.

Did it, was it months or was it, you know, like a half a year? What, what did, I'm trying to get the vision in my own head when we do these. What is the adoption rate? How long do people take to get comfortable doing something new?

[00:20:02] David Lynch: Yeah. I think from coming up with what we wanted to do to implement and to people being comfortable, probably a couple of years, if I'm honest.Yeah, I suppose that the implementation bit was, was probably the hardest.Cause everybody being used to doing things a certain way and a standard way.

So yeah, it's, it's a long, it's a long process, a painful process, but worth it in the end, like, like a lot of things. 

[00:20:32] Ronald Skelton: So, um, now you've got it in there. I was surprised to say it was a couple years, but I could see that. People, they say they're using it and you're finding people that aren't. And, you know, there's still people trying to do things on paper and that type of stuff. But, uh,you, we've got this thing implemented.

Did you see efficiencies after switching over to the system? Did it make things, they always sell you when you buy, uh, Salesforce or you buy some type of inventory tracking software and stuff, they sell you on how more, how much money you're going to save in the long run, because you're going to be more efficient.

Did you get a chance to witness efficiencies or what did you sell before that ever happened or what did that look like?

[00:21:07] David Lynch: Yeah, absolutely. One of the biggest things it done, which I didn't think it would was, it helped us grow our margin. And I think the stats were went from like 48 percent gross margin, about 60, 61%. And that was because the system allowed us to measure everything that we did. The quotes that went out, everything really measured. So the dashboards that we implemented we're constantly looking at how many courts were won, what the margin was, was running through the courts. And it played a big part in helping us transform our margin because it, it sort of the, the KPIs, the reports, the dashboards. Yeah, it's sort of really transformed that side, which I wasn't quite expecting.

And it's sort of like,I don't know whether you've had a, you've run a sales team before, but a lot of the time sales people want to do their own thing. And it sort of helped make them a bit more accountable and, everything was there. We had the live dashboards up in the office of how many quotes each person had done, how many calls had made, how many visits and meetings that they had. And it was just all live data and it was great. Great to see.

[00:22:26] Ronald Skelton: I once got to see a company who took that live dashboard and they made a scoring, they made a game out of it, right. And they put screens. They had about 200 employees. They put screens up throughout their floor where people working. And, the top performers or show up on the screens. It was rotating.

So you see who's like, who's at the top of the leaderboard. And then every once in a while they did management by shaming some people too, because every once in a while, they'll show you the bottom of the leaderboard. Like these are the people doing the fewest calls. These are the people doing the least amount and like, they're back, their border for their like, they were on the screen, the border was all red. And then when the guys that were leading the leaderboard, their border was green. And I thought, I don't know, I asked to have that. Pulled him aside, well, cause I know the guy that owns it. So is that really working? He'll go, yeah. Pure pressure really works because it's a team environment.

Everybody's like, yo, come on, buddy. Come on. You want to be off the, you know, but somebody always has to be the bottom, right. So this, this company, if you think about it, you got 50 people on the floor doing the, the same, you know, type of task and, somebody is always going to be the bottom five. Even if they're just rock stars compared to every other company on the planet.

So, uh, it's a tough environment, I think. But I'm a big fan of, anything that's measured can be improved. So having those dashboards and having that, one of the things, some of the tools are starting to do is you can do competitive analysis too, right? You said you caught, you said something that caught my, my, uh, greedy American capitalist pig, you know, radar and that their profit margin, your gross profit margins went from 40 to 60%.

That is insane for most companies. I'm in pest control, after two and a half years of Mike, one of my family members, my cousin saying, you know, I should get into it, I should get into it. And I kept telling him, no. I started looking at mergers and acquisitions. And so,and they were, I've seen some of them on self like Biz Buy Sell and they were claiming 30 to 40%, 50 percent profit margin, like ah, BS. And I started doing the research.

And when I did, I was like, wait a second, why am I telling him no, he should probably go look at this. That's a high profit margin, gross profit margin. Here, if I was trying to, if I was in your sector doing what you're doing and trying to hit those profit margins, I'd probably be going after government contracts because they, they tend to pay more.

Did you end up having government contracts on that? Or was it, this is just the normal medical device industry has a high profit margin?

[00:24:50] David Lynch: Yeah, no, I think, um, the margins in the industry are probably higher than, than most. But the contract side of it, the actual contracts themselves were fairly tight. But it was the opportunities and the other stuff that you got around it whereit was probably led to the higher margin stuff.

Some of the work, some of the bigger projects, so I guess to give you an example, we might have a contract to cover the whole of a region and that was in supply, install and maintenance. But through the people we met and through the recommendations we would be quoting for like brand new school builds and brand new hospital builds and just the, the opportunities to sort of, you know,what's that sort of marketing technique where you,you go in at a certain margin and then it's, it's the work you get on the back of that, that helps you sort of drive you your overall margin.

But that's one of the reasons we started to manufacture as well, which massively helped because once we had the footfall and we had the, the contracts in place, then it was just a case of converting some of that to our own products, which obviously drove the margins up.

[00:26:15] Ronald Skelton: Were you guys, um,it's okay to say you can't, you're not going to tell me, but what was the price range or not the price range of selling, but the actual, like you were doing 10 million in turnover revenue a year, 15 million. What was the, when you exited what, you know, what was your peak? Did you guys, cause if you're into installation and you're into manufacturing and stuff like that, I'm drawing a bigger and bigger picture in my head of how big this thing was in the 11 years you ran it.

So kind of, you don't, can you give us the ballpark? Does that make you uncomfortable?

[00:26:46] David Lynch: It wasn't huge, you're talking sort of the 15 mark. It wasn't like huge because we, we'd only started manufacturing, I would say, three, maybe three years, four years before the exit. So, we, you know, we weren't an established manufacturer or anything like that. And it was mainly the,the supply installation service repair side of it, which was like the big area.

But yeah,and I think the interesting thing is,and again, something we might come on to, but, because that was all organic growth from a guy that started from his bedroom, with a few rounds of debt funding, but no sort of big equity sort of, um,release or anything like that. It was all the organic growth that I kinda, I didn't even know how to do it.

I was figuring it out. So the exciting bit for me is now, I know how to do the organic growth. And I now understand more about mergers and acquisitions where at the time I thought that was just for the people on TV. That's where the real opportunityis for me. Now, moving forward, because if I can combine that organic growth with a strategic growth and fast track what we did organically because of what I know now, I think that's where the exciting sort of opportunity lies.

[00:28:16] Ronald Skelton: It's interesting. The, uh, I think there's a unique, inside of what you were doing there's a unique moat. What we refer to as a moat, a barrier to entry. Especially on the installation.One of my, I don't think I told you this before the show, but one of the last businesses I had was a real estate investment firm.

So we built, we would, remodel houses and buy houses and you're mostly residential. And, we actually had, one of the houses I sold on my own, I sold to somebody who was in a wheelchair. And they asked me before we finished remodeling the house, if we could do certain things to it. And I had no idea that like they needed a lift to get in and out of the big tub.

That was a big jacuzzi tub there and there needed to be a special lift bolted to the foundation to help him getting out. And so I try to buy the thing and have my handyman, my guy install it. And they said, Oh no, you can't do that. Right. The manufacturer requires a certified installer to install it because of the health and danger risk of it.

And it was expensive. Now the guy was paying, it wasn't my wallet. The guy, he bought the house and he needed it done a certain way. So he was paying for this, but I was trying to save him some money. Cause like my, my guy's good. You know, the guy I had, he can put a handrail in your shower. He can put a, he can put a lift, you know, into the concrete foundation.

We bolt things to the foundation all the time and it just, that was not allowed. So there's a barrier to entry in that some of these devices. They require it to be installed because of liability reasons by somebody who's been trained by them.

[00:29:42] David Lynch: Yeah, exactly. That's, uh, I mean, these are class one medical devices and, if you install a hoist on someone's ceiling and the hoist comes down, then someone's likely to die. So, yeah, it has to be, has to be done and you're right, there's a barrier entry there. But there's a, there's a challenge around the skills and getting the right people and enough people to be able to do this, this type of work.

But yeah,the average sort of transaction of each seal was, was fairly high. As you mentioned there, I mean, like a, like a swimming pool hoist, you're probably talking six, 7, 000 English pounds. Like a full hoist coverage system that maybe goes from bedroom through your bathroom, through another room, maybe you're talking about maybe 10, 10, 000 pounds, English pounds.

So the transaction value was high, but it was, it was a very skilled job and, we were looking just as our competitors were to employ some really good skilled people that were really good at the job. And we're really,we're sort of, we were providing a life changing solution for people because if they didn't have this they couldn't get out of bed. So, you know, it was, it was changing people's lives as well.

[00:31:10] Ronald Skelton: Yeah, it was, it was interesting because I toured the house right before we closed on it because I wanted to see what all they did. They put a hoist in his, uh, above his bed. He'd help him get in and out of the bed into his chair. They ripped the bathroom. We just finished totally out on one of the bathrooms, his master bedroom.

It was a walk in shower, but it had a ledge. They reached, they ripped it out of there and made it to where you could just wheel the wheelchair right into the shower. And there was a lift there to move him out of his wheelchair. But if he wanted to, he could have just wheeled right in. There was no, there's no longer a ledge.

So they changed the structure of the floor mostly in the shower. And then for the, that one, that, that bathroom was huge. A walk in shower and a big jacuzzi type of bathtub with jets. They mounted the lift. It was like a swimming pool lift. It was exactly what it reminded me of, to get him in and out of the jacuzzi swimming pool.

They mounted that to the foundation because it was a big hydraulic looking thing. And then above his bed, it was, there was something hanging from the ceiling that helped him get in and out of bed. And then, try to think there was something else in the house. The guest bathroom haddifferent hand rails and stuff like that.

So I guess he had some friends that needed help and stuff. So, but even, even the bathroom, he just didn't intend on using, they modified. And then the kitchen, they took one side of our cabinets out and made them narrower because the kitchen was a galley kitchen and it was a little too narrow to, you could wheel in, but you have to back out.

I think instead of turning full around, if you wanted to go, so they just made a narrower set of cabinets on one side. They did a lot of work to it. But, uh, it was a specialized team that went in and did it. 

[00:32:40] David Lynch: Yeah, it's a huge growth sector. I mean, we're trying to keep people out of hospitals and trying to keep people in their own homes. Within that sort of home care arena, you've got your access, as you see, your stair lifts and your through the floor lifts. You've got your pressure care, your beds and your specialist mattresses.

You've got your patient handling, which is your hoists and your, your slings and that sort of thing. You've got environmental controls, so somebody can operate the front door and all sorts from, depending on how easily they can communicate. There's a lot of materials and equipment around that.

So it is a, is a big, and it's a growing sector.And, but it's a fulfilling sector as well and an enjoyable one. So yeah, it's something that I've been out of the industry for three years now. So, yeah, it's, it's definitely, uh,brings fond memories.

[00:33:37] Ronald Skelton: Awesome. Let's talk about, okay, you've now exited, you've taken, you learned about mergers and acquisitions. It sounded like you took a little time off in between there. You're trying to probably figure out what you want to do next. A lot of times that you've been doing something day in and day out 40, 50, 60, 70 hours a week as an entrepreneur for 11 years.

There's a rude awakening when you wake up the next day. What was it like the day or two after you're selling? We're like, I don't have to go to work and there's nothing for me to do. When did it sink in that you better find something else to your board?

[00:34:08] David Lynch: Yeah, well, it was a, it was a brilliant feeling. The only challenge or downside was it was COVID. We couldn't really go at the time. We couldn't really go very far. But I think it worked in my favor cause it just, it just really helped me switch off, down tools, relax. And,it wasn't a case of them flying all over the world and doing a super duper trip or holiday or vacation as you say.

And, um, yeah, so I suppose it, it's probably took me three years to really, I would say, get, get my sort of mojo, get me motivation back. Cause I have really enjoyed just, not being accountable to anyone, just having a bit of financial freedom and, and being able to do what I want when I want. And that's still forms part of what I want to do going forward.

But it is a, it is a really good feeling. And I would always say, you know, people say to me, should I sell my business? Or when should I sell my business? I think the best time to sell your business is when somebody is prepared to buy it and, and it's amazing what you can do, when you haven't got the day to day pressures.

I've, I've discovered things that I didn't even know existed.And new areas and new passions and, and I think that's a massive part of, of having a capital event and having an exit. You've got just your time to discover new, new areas.

[00:35:40] Ronald Skelton: I think the COVID might've helped you. A lot of people, a lot of business owners tire their whole sense of identity around their business. Now you did the, you did something really cool in the fact that you prep for three years. You made yourself not a key person in the company. So you, you kind of had a time to ramp down to where you already kind of knew when you left, it didn't need you.

And it was already in good hands. Cause if you, if you totally prepped it for sale, it was running well with, with or without you, right? So a lot of the times people, when they leave a company, they're just the back of their head is, where is it going to go? Is it going to survive? You took care of that by preparing it properly for exit.

But, uh, and then you kind of, COVID might've helped in the fact that you didn't have a choice, but to sit there and think. Cause you couldn't go anywhere and do anything else. So it wasn't like you were traveling the world the day after you exit, you got your wire transferred into your account and you went on a world trip and realize, Oh my God, this isn't as fun as it is I thought it would be. 

You got to spend, a month, two months, six months, whatever it was, you know, in semi isolation meditation. Figured out what you wanted to do and as soon as it broke loose I'm sure you did get to go see things and do things and enjoy that freedom. But uh, you got to go through that process in a in a different environment than most people would have. Probably fairly thankful that you were financially able to do it.

Cause a lot of people really hurt during the COVID. Their business, especially when they're B2C customers, their business is really hurt during that timeframe. 

[00:37:08] David Lynch: We, we were lucky because again,the company and or group that bought us, they were in like the space of manufacturing beds and mattresses and all different stuff for the NHS. And so, they didn't, if anything, their, their business did grow during these times.

And it, it did affect our business to a point, but not, not that much compared to most of the businesses.

[00:37:35] Ronald Skelton: Let's jump into what you're doing now, right. For the last, 10 or 15 minutes here, let's talk about, okay, you're back into the game. It sounds like you've, you've got together an acquisition group. You're maybe back in the same sector, but what is it that you're up to now? And, we'll just kind of dive into that.

[00:37:55] David Lynch: Yeah, so I had a three year non compete. 

I've got a guy local to me, Ross, he's got a medical background in healthcare. He started off as a physio and he's done, he's done very amazing things in the space and he started in the mergers and acquisitions space before me. And we just, funny enough, we just met. We knew each other on LinkedIn, but we metin the airport on our way to the Harbour Club Dealfest in Dubai. And we just got talking and, we just said like, you know, what you're doing, what I'm doing. And I said, let's, let's get together, let's get together and really go at this. So cut long story short, we've, we've, we're on a buy and build strategy.

We're still in fairly early stages. We've got two or three deals that are progressing. A couple in the UK and a fairly big one in the US.So that again, it's back to having a learning curve. I learned from Ross, I've learned from other people in the space. But again, just going back to what I said before, I'm going to combine that organic growth and those experiences, with the strategic growth and buying companies. We can make them better with my knowledge and Russell's knowledge.

We can make each company better and bigger, and then we can keep all and businesses in to the group. And the plan is a sort of a five year ish, sort of, um, plan. Which takes, would take me up to around about 50. So, I just like, I just like the amount of numbers. But, um,so there's the healthcare side is kind of, what I know and what I've lived and breathed previously.

And then there's another area which is, which is like facilities management, trades or electrical, mechanical. And,part of that facility services is commercial cleaning. And I've, I've recently just done a deal with a company where I've acquired a stake in that company, UK based. And, we're going to do a buy and build in that space as well.

So the plan is, high level plan is to grow in healthcare and facilities management. Which will include some commercial cleaning, electrical, et cetera, build them both. There might be a third one as well. Cause I've got a, an interest in one that's bubbling under the surface, but at least two, if not three groups of companies that I will get exits from in around about five years time.

[00:40:45] Ronald Skelton: I have a buddy here in California years ago. He did the commercial cleaning and he had a heck of a time because here in California, in a lot of places, it's all about labor costs, right? To be competitive in the commercial cleaning space, and bid competitively. And he, he had big clients, hospitals and, uh, two or three, I think he had two hospitals and some major big corporations that they went in and did cleaning.

And he had staff that could, we're trained in swapping out like the medical supply, you know, the hazardous waste boxes and all that. So he went through the thing and got some people certified in different things. But labor was oh, I always ask him. What's your biggest challenge? He says finding labor that's affordable enough that I can compete on these contracts. Because you got to pay, got to people pay people right and pay them enough that they hang around.

Cleaning jobs kind of a low level job, so it's not a high paying job. But you know, if I pay enough to keep people around often, I can't compete on the contracts, right? It's an interesting problem to solve. You're just getting into that space. Do you see that in the UK too? Where your biggest, your biggest component of that business is cost of labor?

[00:41:53] David Lynch: Yeah, absolutely. And,I also think that's an opportunity as well because the things that we did,you know, our culture to be able to attract good people. They've already got some really good people. The business has already been going for like sort of five years or so. And, yeah, they're, they're a good, they've got a good management team in place already.

And that, that management team really looks after the staff.But again, looking at the positives, it's predictable revenue. It's contracted revenue. So it's very similar in that respect to what I've done before and I really like that model. You know where you are month to month kind of year to year. So I definitely see the positives outweigh the negativesin this sector as well.

[00:42:43] Ronald Skelton: Yeah. In the, the cool thing with it is long as everybody's held to the same standard,nobody's playing against the rules, then everybody shares the same problems, right? All your competitors are having the same challenges of keeping good people and paying people right and stuff. On the medical side of what you're working on, are you back into like looking at medical devices and stuff like that? Or are you in, I know that you said physio for those of us in the United States, that's a physical therapist, something I see twice a week.

But you know, it's, you're the guy helping injured people get back on track or helping people become more mobile and that type of stuff. So it seems like the, there's a lot of alignment with the physical therapist world and what you did with your medical devices world, right? A lot of the stuff that, you know, somebody who needs physical therapy we'd need to use in their house to help them get there. 

You sold in your previous company, so you, I can see where you would have great alignment with Ross. But what sector, I mean, medical fields is so huge. What sector are you guys looking at?

[00:43:46] David Lynch: Yeah. So again, it's, it's all around the sort of, um, fancy names, assistive technology and that all of those areas I mentioned before. So patient handling, as we did before. Pressure care access, so your stair lifts and your ramps and your, your lifts.

[00:44:06] Ronald Skelton: So it's back on that. Cool.

[00:44:07] David Lynch: All of those areas. And then within them areas, a combination of manufacturers, distributors and like service and installation division.And there's a lot to go out there. But in theory, if we didn't want to go on past the five year mark, we could bring our own therapy services in. We could have our own care homes. You know, the possibilities are endless.

[00:44:37] Ronald Skelton: And those profit margins are still huge. I looked at a company, I guess it's been almost a year and a half ago now that they, they only did installation. So they didn't manufacture it or whatever, but they installed three or four different product lines of the walk in showers. Like, the not walk in showers, but the walk in bathtubs. As the bathtub with the door, you can basically, you can walk in, sit in a chair, shut the door and then fill it up.

And it's self filled. Those things, I never realized how outrageously expensive they were, right? But there's decent profit margins. Some of those showers and stuff are in the 30, 000 plus dollars US. But that company was doing really, really well. Unfortunately the owner, has had three owners. Two of them wanted to sell.

And the third one kept trying to convince the other two, he was going to buy it from them. And I don't usually get involved when there's, if there's two, I'll consider. That, when the third person comes in, I'm kind of out just because it's just so hard to get three people to align on everything. And I should circle back around and see what happened. But he kept thinking he was going to raise the money to buy the other two people out of himself.

I didn't realize that, uh, I seen the profit margins in that particular one, but it didn't click that most medical devices, or at least a lot of them have, have ranges like that. That's a, it's a very, a lucrative space to be in.

[00:45:54] David Lynch: Yeah, yeah. And I think it,it needs to be really because you're not manufacturing big numbers, you're not, you're manufacturing widgets or, you know, you're, and a lot of the products have to be designed in a way that allows an element of bespoke, bespokeness. Cause you know, you've got, you're dealing with people, you're dealing with many different disabilities.

You're dealing with many different sort of shapes and sizes of people. So the products need to be adaptable, and they need to be built with that, that, that ability to, to suit the individual and the person. So, um, the kind of, you know, the, if it were just walking sticks or, very basic products, yeah, but the bigger margin stuff is a lot, is the stuff that's more complicated.

[00:46:49] Ronald Skelton: So that takes, there's a lot of cool technology devices too, out there now that are, that didn't exist, right. That, uh, like, my father in law's 80 and we have ring ring door cameras on his door and some other stuff. So he doesn't have to get up and go check the door. If you're wanting to just open the tablet, see who's bugging.

If it's a sales guy, you can tell them just to go away or whatever. But there's this, there's technologies out there now that are on the open market that a lot of, that help a lot of people who have mobility issues and stuff. What's a sector, you know, are there, is there anything inside of that industry?

Like you just steer, still steer clear of that you're just not interested in? Is there danger zones or things that you see that are either low profit or you think is in the life of a particular product or something like that? If a company came across, they're selling this, we're not even interested. We're not going to look. 

[00:47:33] David Lynch: Uh, no, I mean, I think we would look at everything. The most, specialist stuff is probably preferred, a company that just sells these mobility scooters. The manufactured probably in China or there, and that, you know,it's box, that's more like buck shifting. And I've always, you know, been brought up in the more specialist field where you need a, there's a, there's an element of advisory from your company as well.

And helping, helping the therapists, physiotherapists and the occupational therapist, helping them solve problems for their, that uses, that service uses.

[00:48:12] Ronald Skelton: Well, I absolutely want to thank you for everything you do, you do. I don't say this on the show very often. I've used many of the devices. In my youth I was very active. I raced dirt bikes and motorcycles. I've been injured quite a few times. I've had six knee reconstructions. Both my ACLs have been replaced in both my legs multiple times.

I've used the wheelchairs. I've used things that help me get in and out of things. Even recently I was in a car wreck. So right now, if I walk more than 200 yards, I have to use a specialized walker to make sure I don't fall. And I'm going through physical therapy or physio right now to get away from that thing so I can be more mobile.

So, uh, I appreciate, you know, the fact that you built companies like that, you provide services like that. And there are, companies that can help people stay mobile and live on their own. Cause I, you know, I, these are minor injuries compared to what a lot of people have. I couldn't imagine living in a house where I have a hard time getting around my house.

So appreciate that, you know, the companies are out there doing what they're doing. And, now you get a chance to look at it, from a different point of view, from the acquisition entrepreneurs, the viewers, point of view. You did it right the first time, and now you get to go help other people do it right. You get to go acquire companies, be that safe pair of hands that take them from what they built to the next level.

I look forward to seeing what you build. I look forward to, maybe having you come back on here next year and go, here's where we're at, right? We're at 10 million already in revenue, 20 million, whatever that is. And, uh, you can bring Ross with you. I don't, I'm a big, Ross has been on the show too.

So you know, you guys can come on together and we just, we'd brainstorm or where you're going and get the word out of what you're up to. So that would be fun.

[00:49:44] David Lynch: That'd be cool.

[00:49:46] Ronald Skelton: Thank you for being here today. If anybody wants to sell, David and his crew, a medical device company or a cleaning company, how do you want them to reach out to you? What's the best way to contact you?

[00:49:55] David Lynch: Yeah, probably LinkedIn. Yeah, it's good, find us on LinkedIn. I'm fairly active on LinkedIn. Instagram as well. I spend a bit of time on there, so maybe as we put the links in the, um, description and yeah, feel free to reach out if,if indeed you have got a company that you're looking to sell or even looking to grow, to scale and grow, it might be something we can help with.

[00:50:18] Ronald Skelton: Awesome. Awesome.. Well, thank you for being here today and we'll call that a show and I'll make sure those links are in the show notes. So that anybody who's listening can, if you're driving or something, just, when you get to a stop, pull over, look at the show notes, the link to, to find David and we'll be in there.

And again, we'll call that a show. Thank you.