E#36 with Joshua Catlett: Why Most Clinic Owners Are Not Exit Ready | BOAC

Joshua Catlett bought his first private healthcare practice at around 22 years old.

He started at the front desk, answering phones, making tea, fixing the website, managing the diary and learning how a clinic actually works from the inside. That first practice eventually became the foundation for BodySet, a 36-site healthcare group that went on to take private equity investment.

Today, Joshua is the Founder and Managing Director of Verilo, a specialist healthcare business brokerage and advisory firm supporting clinic owners through valuation, sale, acquisition and exit planning.

In this episode, Jared Aron speaks with Joshua about the real business of buying, selling and scaling healthcare clinics.

They cover what buyers actually look for, why concentration risk can reduce valuation, how maintainable EBITDA is assessed, what makes a clinic genuinely exit ready, and why many owners only discover operational weaknesses when they enter a sale process.

Joshua also shares stories from his own acquisition journey, including how he structured early deals, what he learned from sitting on reception, why the front desk gives you one of the clearest views of the business, and how small details such as insurance, lease terms or poor financial visibility can put an entire transaction at risk.

Later in the conversation, Jared and Joshua discuss technology adoption in healthcare, the rise of AI, the pressure on clinics to become more efficient, and why online booking is still far more difficult than it should be for patients.

In this episode, they discuss:

• Buying a private practice at 22
• Building BodySet into a 36-site clinic group
• Selling into private equity
• What Verilo does for clinic owners
• Why selling a clinic is not just about finding a buyer
• The emotional side of healthcare M&A
• Concentration risk and owner dependency
• Lease security and premises risk
• Maintainable EBITDA and clinic valuation
• Why buyers care about data quality
• The importance of understanding the patient body
• Why many clinic owners do not know their numbers
• AI, workforce transformation and operational efficiency
• Why clinics need to make booking easier for patients
• What it means to build an exit-ready clinic

This episode is especially relevant for clinic owners, founders, healthcare operators, MSK clinic leaders, aesthetics clinic owners, dental practice owners, buyers, sellers and anyone thinking about the future value of their healthcare business.

The Business of a Clinic is hosted by Jared Aron, founder of Coherent. The podcast explores how private healthcare clinics can grow by improving the business and operational side of care, including patient engagement, follow-up, retention, technology, clinic operations and the overall patient experience.

Transcript

SPEAKER_02 0:00

Bought my first private practice at what'd say 22. That was a real labour of love. And then my colleague and mentor at the time said, Well, you've already made one acquisition, why don't you make another? And I thought, well, I haven't got much money, but I'll see if I can strike some deals. What was going wrong in the practice was the phones weren't being answered in a timely manner because they had one telephone line and one receptionist who had to juggle, do I be polite and offer a cup of tea or rebook a patient or do I answer the phone? I looked at that and thought, if it's doing this well, despite all these flaws, imagine what it could be doing if you fixed some of these. I often describe the most time-intensive part of my role as being an agony hunt. I spend more time talking people down from the ledge than anything else. The amount of times where I saw a strange diary layout, 7.15 to 922. And you think, well, that's a very specific window that suits you as a therapist, but is actually to suit your patients? Probably not. Only way that they knew that their business was doing well or not was because they had cash in the bank and they could pay everyone at the end of the month. That was it. And the offer that I made for the business went from, here's my good six-figure offer, overnight to I'm gonna have to shave this by 75% and make a load of your team redundant.

SPEAKER_00 1:16

Hey everyone, we're here with Josh from Varillo, part of the private healthcare landscape here in the UK. Interesting background across provider operations, buying, selling, transacting, helping the ecosystem mature. We're gonna hear, I'm sure, all different perspectives around that. So thank you so much for joining. If you don't mind, maybe a quick introduction on who you are, what brought you into this world, and then would love to go from there.

SPEAKER_02 1:40

Sure. Thank you. I'm impressed you got the name Varillo right. It's uh I had I had a two. That's usually the first thing people get wrong. Um uh why why I picked that name, I don't know. But uh maybe maybe we'll get into that another time. Um yeah, so I I I've I've come from a fairly uh unique background into it into what I'm doing now. Uh so my my entry into this market was I I trained as a physio. Uh I never did loads clinically, but did was a qualified physio. That's how I entered the profession or the market. After a short stint working uh in the occupational health sector, which I still have very fond memories of and a and a passion for, I founded my own business, which at the time was called First Point Health. That actually came about because I had an opportunity to set up an occupational health service with a large car manufacturing business. I bided for the tender. Sadly, that that that bid didn't go anywhere, and I had some seed money left over. And uh a colleague of mine at the time introduced me to the world of mergers and acquisitions and said, why don't you use, you know, rather than burning through that cash, why don't you use that to um uh uh buy a small private practice, use it as a springboard? So that's that's sort of how I started in business. Bought my first private practice at what'd I say 22, uh maybe it was slightly younger, slightly, but about 22. And uh that was a real labour of love. So I um uh I I painted it, I made cups of tea for uh everyone that came through the door, I uh did the gardening, you know, you you name it, I did it. Interestingly, I didn't, I chose not to do the um service delivery side of things, so I didn't do physio in that clinic. Um not to demean the sort of day-to-day reception role or or admin work at all, but I felt that uh I was able to do that while growing the business. Whereas anyone that's worked clinically with a patient, you've got to be a hundred percent present, you've got to really be focused on that patient at all times. When I bought that business and took over that business, I sat on reception and I did what was the job I felt I could multitask with the most. I basically used what I could to develop that business, put a new website in place, focused on marketing, and uh turned it round, increased the profit by a small margin, used that money to open up a couple of satellite sites, and then my colleague and mentor at the time said, Well, you've already made one acquisition, why don't you make another? And and I thought, well, I haven't got much money, but I'll see if I can strike some deals. And then I started reaching out to people in the market. I made some fairly oddly structured deals at the time, and made another acquisition. From there we made another, opened more sites, and long story short, several investment rounds and acquisitions later, we had created what is now today body set and uh built it to 36 sites. And just before the pandemic, that uh that journey culminated in a partial equ a partial uh saled private equity, and they've now taken on a majority stake and taken that that that business for today.

SPEAKER_00 5:07

I have a lot of questions.

SPEAKER_02 5:09

Go for it.

SPEAKER_00 5:10

So trying to think about where to start. Uh you're 22. You make a bid for uh a tender for an occupational health service. A very naive 22-year-old. As we all are at 22.

SPEAKER_02 5:23

A naive 22-year-old with no money.

SPEAKER_00 5:25

There's the best combination. And so you find yourself owning what I'm assuming is a small Yeah, well, small one, two-room sort of practice. You train as a healthcare practitioner, but you make the decision not to do the thing that you are in theory most qualified to do, and instead you're going to run the business side, the admin side, because you can multitask, you can do many things. So you're painting, gardening, dealing with clinical waste and everything in between, and then you hire or you in-source the clinical talent to provide the service. I don't like this many years ago, of course, but what if you're going through my mind? What was going through your mind? What what what contributes to that kind of decision?

SPEAKER_02 6:12

Yeah, no, it's it's it's it's an interesting one because I think a lot of people would sort of say, well, you know, you've gone into the a clinical profession, you obviously had an affiliation with that. Um why did you stop being uh So early? Yeah, so so early. Um I think I I had good reasons for going into the profession. Um, I I I enjoyed science, I enjoyed sports, um uh I I wasn't quite academic enough to be a doctor, um, uh, but I wanted to be in a profession that was similar. Physio ticked all those boxes. Um throughout the degree, I became a bit disillusioned with it. Um, it was less about kind of fixing shoulders, knees, and backs and working in high performance sport. Uh, and the degree was very focused on um aspects of the profession that that I didn't enjoy as much. Um you may not know it, but I probably would I would consider myself a little bit more of an introvert than an extrovert, and I feel that um I've always thrived more behind the scenes and in back office uh type roles, so I was never hugely comfortable with being a clinician, being a physio. I was an okay physio, but it wasn't I wasn't the best in the world. The I was also quite odd as a physio in that I enjoyed the report writing side of things, I enjoyed the data, I enjoyed the analytics side. Probably while I went into occupational health, because I really enjoyed the c uh complexity of working with patients but within an ecosystem of a of the business and the sort of return to world return to work world. So for me it wasn't just about you've got a torn ligament or a bruised bit. It was very much actually, is there a psychological component here? Are there some organizational factors at play? Um you know, is there is there is there something else that we can do to solve this problem? It was very much about problem solving. Um and prior to starting this business, I'd actually gone down a very unique career pathway anyway. So rather than going into the NHS, rather than becoming a private physio, um, I I had joined uh what's called a knowledge transfer partnership scheme. So I was employed by the University of Hertfordshire to deliver a um uh series of training courses to nurses on red flag screening and occupational health. Um so a bizarre start to my career anyway, and that's what then led me to uh I ended up heading up a small team there. So even in the first two years of my career, two or three years, I wasn't working clinically uh or much clinically. Um now my my boss at the time was uh he was a fantastic boss and he allowed me to have a day off per week to go and uh shadow a really experienced physio because at the time I wanted that as a bit of a safety net. Uh it it allowed me to develop my um clinical career alongside the business project management side of things, but I very much enjoyed the latter side more. When I acquired uh my first practice, my thought process was uh and and I maintained this thought process through most of my acquisitions, keep what's good about the practice and kind of stick to my lane. So with that practice, I acquired an absolutely fantastic physio, who I believe is actually the longest-standing physio with the company. Um I'm now no longer involved with, but uh, I believe she still works for the company that I exited. Um, but she had a fantastic relationship, she had the local knowledge and a lot more experience in the clinical profession than I did. Um, but I could see where the practice was going wrong, and it wasn't the clinical service delivery. What was going wrong in the practice was the phones weren't being answered in a timely manner because they had one telephone line and one receptionist who had had to juggle do I be polite and offer a cup of tea or rebook a patient or do I answer the phone? Uh the website was dated. Uh even the diary management were was was sort of poorly arranged. Um so I thought, well, I can either come in and replace something that's good about the practice, just for for ego's sake, or to give myself a more or more sort of meaningful role, um, or I can sit on reception and work on how to fix or improve the business, and I chose the latter. But again, I think it was my problem-solving nature that led me to that conclusion.

SPEAKER_00 11:23

It's interesting. Um when I when I started working in clinic leadership, so I I came into it not with a healthcare background, but probably a similar trajectory of front office and back office operations and being responsible for the business of the clinic, not the clinic of the clinic. The time that I spent working at the front desk, which was often to cover when people were not in, or in the weird in-between shift hours and or other gaps in diary, whatever it might be, I found that the amount that you learn about the clinic at the front desk arguably was 10x almost any other part of the business. You understand the patient, the customer, the booking flow, the revenue cycle. It is very much the the heartbeat of the clinic. That was at least my experience.

SPEAKER_02 12:20

Was that is that many years now, but was that your experience of being at rewinding the clock a bit? But yeah, no, I I don't think there's anything that uh anything that can replace that, uh, as I said, being at the front of the action and uh seeing that patient journey, seeing those touch points, uh, hearing the uh not say the complaints, but the kind of gripes that people have, or all the positive feedback. Um get that a lot more when you're sat on the front desk. Whereas when you're the uh clinician delivering it, it's a very different dynamic. So, no, it was a hugely useful experience and allowed me to shape how future sites operated.

SPEAKER_00 13:00

So let's go on that journey. So you did your sweat and love in the early sites, and weeks, months, years pass, and what becomes bodyset is a 36 site group, probably one of the more owner-operated, shaped for that size, hosts get to that size, but usually get there with other hands in the pie, and you're supposed to be more of an organic story under your leadership. Without going month by month over that time, what are the highlights? What are the chapter titles from site one to site 36, the bruises, the wins, the things that you think back either very fondly about or glad I never have to do that again?

SPEAKER_02 13:44

Good question. There were so many different moments in that journey, many positive, many less positive. And what I really enjoyed were the were the acquisitions and and fundraising to a degree, and there were some uh interesting fundraising stories. But with the acquisitions, what I enjoyed was going out and seeing different people's businesses, learning how they operate, uh, appreciating what they do well, and uh looking for opportunities and seeing what they did wrong and where we could add value. I try and instill this in the buyers that we work with today, but if I can see a business, or if I saw a business that was essentially performing well on paper, but needed a repaint, had a bad website, they weren't answering the phone, to me, they were little light bulbs going off. I looked at that and thought, if it's doing this well, despite all these flaws, imagine what it could be doing if you fixed some of these. And all of those things were things that clinicians and owner operators are typically not so good at, but I knew I could add value. So that really excited me was going out and seeing appreciating a business for what it is, but seeing the opportunity to build on that and to professionalise it. And as I said, every deal took a slightly different structure. I think one that stays with me was our second acquisition. So I uh it was our first kind of venture into a big grown-up clinic in in London. Um so at the time we had uh our small clinic in Bushy Heath, which you're right was a you know one, two room sort of uh XGP practice, uh lovely site but but small. Um uh and we had a couple of satellite clinics, so we sort of built up a you know bit of a bit of a business, but nothing nothing particularly exciting by that point. There was an opportunity to acquire a uh dual site business in London, uh operating across Camden and King's Cross, two very large clinics, proper leases, four, five, six treatment rooms, Pilates studios, and um I think it was on, I think it was marketed uh by a broker at the time, and it was a very uh you know quite an expensive um uh would have been an expensive business to buy. Um but what I remember about that deal is it wasn't necessarily uh for the owner, it wasn't about exiting, it was he at the time had a problem that needed resolving, and I was able to provide a solution and acquire the business. So the business was quite large and they wanted a lot of money for it, but it wasn't actually making any money. Um, the reason that the owner at the time wanted a lot of money for it was because he had personally bought it for a lot of money, so he was trying to get his his um uh uh money back. What I actually did with that deal was um uh oh sorry, I should say the the other thing is he had um uh he he was um he had an ill mother who was over in Asia at the time uh and he needed to go back and look after her. So that they were they they were circumstances. Uh he had he had bought this business, um uh perhaps not appreciated what needed to be fixed with it, and uh was sort of you know running it single-handedly and needed to be elsewhere, couldn't focus on it. I offered a solution at the time which worked for me, worked for him, uh, but again, it was part of that problem-solving mentality that I enjoyed. So we came in and bought 50% of that business for a fairly nominal value. But on the basis that I would go in, I would fix that business or fix the underlying problems, run it for a year, and at the end of that year, we would reassess the financial performance, and I would buy the other half of him for a predefined multiple of profit. I did that, we turned it around, we made it quite profitable, and it actually cost me quite a lot to buy the other half out. But uh and there's not many deals you can do that with these days, but that that was a really enjoyable experience because it gave me a foothold in London, and I still credit that with a big part of my acquisition journey and expansion, but also it was a very fair outcome for the owner, it solved a problem for them at the time, and then they ended up walking away with a lot of additional value that would not have been there had we not stepped in and done that. So, as I said, you don't tend to find those deals all that often, but that that was certainly a highlight for me, and I kind of credit that with being a stepping stone to where we took the business.

SPEAKER_00 18:36

It's interesting. The I can hear and see the deal-making process as something that you enjoy, or you enjoy so it's in no way a surprise that you've now ended up on the opposite side. Well, not quite the opposite side, in the middle. Yeah, all you do right now, and obviously want to hear more about it, but you are now building what is effectively the nexus, the highway for transaction and deal making. So you're living at the intersection of not necessarily your own uh deal making, buying and selling, but facilitating and facilitating probably at a meaningful scale by comparison to what you would have been doing as a clinic operator, where you're buying one, two, three, four. Now you're probably seeing multiples of that because you're working across different providers. So the journey from deal making yourself to helping others to deal make around makes a lot of sense, which I guess takes us fast forwarding in that period to where we are now, which is you're building a new business. This business is leveraging your experience, plus helping others to amplify and create value, realize value. So what what does the day in the life look like now? What is the sort of the nine to five to the extent that it is a nine to five, but it's never a nine to five. But what is the what is the experience of what you're building now?

SPEAKER_02 19:53

Yeah, so there's um there's an element of process behind it. Uh, and I think what I've what I've realized uh having now uh now sort of being in the middle and running uh what essentially is a uh small advisory firm, brokerage, helping people to sell their businesses, is that a lot of a lot of people that um come to us or look for a broker think it's just about finding a buyer. Um that is actually, oddly enough, I mean that that there is no shortage of buyers out there. That is one of the easiest parts of what we do. Um we actually have around 40 expressions of interest on almost every business we take to market. There are obviously exceptions, sector dependent, location dependent, but there's a there's a huge volume of of buyers out there. The skill in what we do is presenting the business in the right way, managing expectations on both sides, and this is a huge problem I see in the brokerage sector, which I'll go on to. But then running that process to make sure that uh we are uh introducing multiple suitable buyers to a to a business owner so that they can assess those buyers and assess the offers they put forward and the deal structure that they put forward to see what's going to suit the their circumstances and their business the best. And that actually goes two ways. So a lot of the time I'm forming very strong relationships with our buyers as well, and even though I'm acting on the sell side, I'm guiding those buyers to make the right acquisitions for their business. So I don't just want someone to come and buy a business and make a quick buck from it. That doesn't interest me. I would much rather help shape the industry and see really good quality buyers at scale, buy the right practices, and there'd be opportunities for sellers, whether they're retiring or Moving on or changing career to sell to those buyers.

SPEAKER_00 22:04

It's interesting to hear you describe it. It sounds like it's almost uh white glove transacting. There's a sort of concierge layer. Obviously, at its heart, there's a marketplace in the sense that you have people selling clinics, people buying clinics, but it sounds like I totally often describe the most time-intensive part of my role as being an agony aunt.

SPEAKER_02 22:26

I spend I spend more time talking people down from the ledge than anything else. And again, I it's not always appreciated because it happens behind the scenes, but there's a huge amount of moments within a deal where it can go south very quickly. Um and solicitors are great at the job that they do, but they're very black and white. Um, and they often kill more deals than they get over the line. Um giving you an example, uh, we we nearly had a deal fall apart because one of my historic clients uh they had an incredible business. Um they built up over years great reputation, good turnover, good profits. Um uh but there was a uh uh they didn't have the correct malpractice insurance uh for the limited company. So I uh uh and and uh the buyer refused to move forward, probably rightly so, without a level of cover being in place because it could have opened up at that, you know, could uh could have been a can of worms, you know, could there could have been a claim that came from it. So uh I actually spent three days uh calling around various different insurance brokers trying to find retrospective um insurance, which cost my client several thousand pounds, but saved the deal. Um, and it's those little details, it's the and again it comes back to problem solving. Um, at any part in the transaction, a spanner can be thrown in the works. Um and what I really enjoy is not just going, oh well, you know, that's it, you know, deal's off, let's go find another buyer, but it's going, well, actually, does this deal still make sense at a broader level? Uh is it a good deal for my client? Is it is the buyer still motivated to buy? What is this problem and how do we how do we mitigate it?

SPEAKER_00 24:19

So, two two questions. So, really interesting, and I love the insurance example because uh, I remember taking out medical malpractice insurance for the clinic that I ran, so I said very fondly. But uh B, I think I think it's a really good example of how messy clinic operations actually are. You can be running a successful, profitable, well-established, well-branded community hallmark clinic, like the client you had. And the one thing that you don't even know is wrong, you have a different form of cover, but it might be, slips through the crack. And absent, of course, the fact that this was a good outcome in the end, it very possibly may not have been. And now you've done all this work as a clinic leader to try and create value, and then you've dropped the ball on the one-yard line because something in the operational side of the business was overlooked for some reason. I think it's an interesting sort of lens to overlay from a clinic leadership perspective. The question I have is you said a lot of the work that you do is around thinking about the positioning. Not here's a clinic, but here's the story, here's the narrative, the positioning, the thing that the buyer should be thinking about when they consider Clinic X or Clinics X or whatever it might be. And so I think it'd be really interesting to understand what some of that storytelling and positioning looks like for you when you get a new seller. What makes you think, well, yeah, I've got there's leverage here. There are there are legs. Because I'm assuming you have many conversations with people looking to sell, and they come in saying, I want 4x, this, and you look at them and say, cool, I'd love five private jets and a yacht, but we don't get what we want. So, what are the sort of green light indicators that make you think this clinic is going to move? This is gonna be something that's really in demand. There are the obvious ones. Practitioner is not the only breadwinner in the clinic location, etc. But what when you really dig into it, what are the sort of things that you're looking around for and saying, ah, there's there's this is good?

SPEAKER_02 26:25

So I have a standard checklist uh of things that I'm looking for, but also there's a bit of nuance there and uh flexibility on when we take a client on or don't based on experience and based on my understanding of who's out there, what they're looking for, and whether that might appeal. So uh I only did a presentation to a large physio group yesterday, uh, and I and I talked about the uh that the four things that really buyers are are looking for and the things that we're looking for in order to decide whether a practice is is ready to go to market. The first one is uh I I I always describe it as um owner dependency, but it's much more about concentration risk. Um uh if you are doing 90% of the revenue uh or you can't leave the business, uh, then it makes that business very difficult to sell. That being said, there are solutions. Um, we can still sell a business that has very high owner dependence, but it must have other valuable transferable assets, and the owner must be willing to stay on board for an extended hando period. Talking about concentration risk, um oddly enough, it's more challenging when you've got a key superstar, physio, osteo, chiropediatrist, uh, who's generating a huge proportion of the revenue because they can't commit to an earnout uh or other performance-related factors. So um they are perceived as a very high risk to a potential buyer. And then the third concentration risk is around contracts. So um things like NHS contracts or corporate contract can be very valuable if they're long-term uh and there's guaranteed volume. If they make up a large proportion of your business, uh doesn't matter how long you've held it, if there's only six months left of that contract, you know, it it's uh it's gonna make it challenging. The second key thing that we look for is uh the the premises. So um lease security, and again, assuming you're not a community business, but lease security is really important. Um, so how long you've got left on your lease. Five years plus is ideal because it provides a level of stability for somebody to buy a business, get in there, take over operations, and if at the end of that term they need to relocate, they've generated or they've maintained enough goodwill. Two months left on the lease actually is less problematic than 18 months because you can have a conversation with a landlord, uh, start to renegotiate. Great, you know, hope you you you you either know whether it's a viable um sale or or not. 18 months is probably the worst. Half cooked potato. Yeah, well, a landlord's not willing to, uh well, often not willing to engage uh in conversations around uh extension or a new lease at that point. Um but by the time you've concluded a sale process, you've only got a few months left, so it's too short for most buyers to take a risk on it. Um, of course, that is unless there's uh it's inside the landlord and tenant acts and there's a level of security. And then the third one is the financials, which um I'd like to say all the other factors are are more important, but the financials are really what someone is going to assess saleability and and and value on, and also it's where it's who who in the market's going to be interested. So the large so revenue largely determines whether a business is saleable and what multiple someone uh is likely to apply. Um when I refer to multiple, um uh although valuation is a little bit of a farce and it's it's what someone's willing to pay, it's generally accepted in the industry, um, and this is sort of across many industries. Um a lot of buyers will uh look at a multiple of maintainable EBITDA as a starting point, and then they might you know modify their value from there. So that's always a good acid test for us.

SPEAKER_00 30:45

So can I can I just double double click on that for a second? So a multiple of I think it's interesting, and it's not a word I've heard used very frequently when thinking about eBidar multipled, maintainable eBidar. So can we just open up the word maintainable for a minute? Because I think everyone will hear that and have their own opinions about what's maintainable. What is your opinion about what is maintainable?

SPEAKER_02 31:08

Yeah. So by maintainable, uh I mean um no buyer is interested in what you did five years ago, um, what impact COVID had on your business. It is largely irrelevant to what's happening going forward. Maintainable is what is the business likely to produce going forwards. And a buyer will assess trends uh and usually the most recent set of accounts or the last 12 months, or even look at a run rate to determine what that is. But they will also be looking at um have you got a contract coming to an end, which is going to cause your revenue to drop? Has somebody just handed in their notice, which is going to cause revenue to drop or a caseload to to reduce? Um, is there uh an energy hike, uh an energy price hike coming down the line? Um, do you have a rent uh renewal coming up? So on face value, your accounts may look great for the last year, but if they are artificially high because of other factors influencing it going forward, a buyer will take most sensible buyers will take that into account. So we will always look at three, four, five years' worth of accounts. If your business has been fairly stable and all of your uh individual line items in your PL are pretty consistent and there's nothing coming down the line that is likely to spike that, it's a probably a fair conclusion that most buyers will take an average of two or three years, and they will then apply what they consider a fair multiple, which is usually determined by risk, to that business, and that's a good ballpark of where you're likely going to get offers.

SPEAKER_00 32:49

Um so we speak to obviously lots of clinic owners given what we do, and we often will speak also to buyers, people build in groups, uh which is interesting as well, different perspectives. I think the three categories you've set out concentration risk makes a lot of sense, property makes a lot of sense, financials, maintainable EBITDA make a lot of sense. I'm curious where maybe the answer is everywhere, but where do you see uh composition of the patient body, or do you see composition of the patient body as something that in some way has impact on the on the perception of value? I I use this example speci I I asked this specifically with dental in mind. We do do a lot of work in dentistry, and clinicians are very, particularly principled dentists, they're very interested in what part of the book is recurring patient, what part of the book is new patient, because when you're selling a practice plus patient book where everybody in the patient book comes in every six months, like clockwork, you have very in high endurance recurring revenue, effectively. And so the reliance on new patient flow is much lower. Do you find buyers and sellers going into that level of detail? Do they see that that almost like archaeology at the revenue level? Or how, if at all, is that showing up in conversation?

SPEAKER_02 34:19

It's interesting. I think it's a very valid point and a very sensible thing the buyers should be looking at. My experience, interestingly enough, working between buyers and sellers, is I don't think enough people go into that level of a detail and apply that to the valuation. Uh, but it was the first thing I did when I bought practices. So I was more interested in looking at uh where are the levers here to bring more revenue in? And what is holding this clinic back? Is it lack of space? Is it poor utilisation of staff? Is it diary management, which I mentioned earlier? The amount of times where I saw as strangest diary layout, 7.15 to 922, and you think, well, that's a very specific window that suits you as a therapist, but is that going to suit your patients? Probably not. Opening hours was one of the first things I tended to change. But yeah, I some buyers do look at that, but not as many as you might think.

SPEAKER_00 35:19

Interesting. I wonder if there's a data issue, just how easily can you surface that information might be part of the problem.

SPEAKER_02 35:24

But no, I think there's probably a data issue across the industry. The challenges I have trying to get up-to-date accounts out of a lot of uh sellers is hard enough. Trying to then get an intricate breakdown of patient activity. Exactly. Good luck. It's yeah. So I think if it was freely available, probably our clients get a bit annoyed with us because we do a mini due diligence exercise before we even launch. But we've become quite attuned to what information buyers ask for and what they want, and we quite often get uh complimented on our sales packs because they're not just the generic uh executive summary and then standard sections that a national broker might uh deliver. Uh, you get what you would expect from a specialist broker, which is we understand what buyers are looking for in this industry and present that. But equally, it's a case of showing showcasing that the business and giving enough information to generate interest without sort of death by data. We don't want to overload prospective buyers too early on. So we try and get out the key information. And one of the things we include is how many new patient patients are coming, new patient flow, uh, breakdown of services, so how much revenue is being generated by each service, how much is private, how much is insurance, how much is NHS, how long are those contracts, is it guaranteed volume, is it uh does it fluctuate? So we try and get the kind of key information in there, um, and yet diff different buyers will ask for different things.

SPEAKER_00 36:59

Interesting. There's a quick point on data. We, as part of our process working with clinics, we begin and then review regularly the appointment book makeup. And one of the things that uh is simultaneously entertaining and terrifying is that we will often show practice leaders their own data, that we don't make the data up. We say, we'll ingest the data from your practice members offered. How does that go down? And we'll show that you look. There's no opinion here. We don't have to come to judging, everyone's going to go different, but we show you the numbers. And oftentimes, I describe it as someone walking into your house and saying, Oh, did you know there's a bathroom over there? And you sort of go as the homeowner who lives there saying, There's a bathroom in the corner of the room. It's a and we have this experience all the time where we sort of almost reveal back to the clinic owner or to the even to the group, did you know X? And oftentimes the answer is, I sort of had a feeling, or I didn't really know, or that's two times what I thought it was. And so much of that is just a visibility problem. You you really need to know and have the tools to go in and look because oftentimes the practice manarin software, which is sort of seen as this do-it-all system, very rarely does it all. You have to do a lot of work to make those platforms business tools rather than calendar clinical note tools. So it's interesting on the data side to sort of hear that part of your job is also trying to find the the sound bites, the data points that you can stitch together to sort of tell that sort of really interesting. So you're now how how long has has Varillo been going? What's the about five years? Five years. And finger in the air, total transactions? 120. 60 transactions is a lot. Okay. So 100 transactions. So now you've got clinic operator hat that you can wear, you've got clinic acquirer hat that you can wear, you've got clinic transaction facility. Facilitator hat that you can wear. So you've got three hats, you've got all the hat the three hats to wear. You're either buying, you're selling, or you're helping other people do that. So you you've worn all three of those hats for different times. Quick question: which one's your favorite hat? Just out of curiosity.

SPEAKER_02 39:14

Different ones at different times. Very diplomatic answer. Yeah. I I also have an investor hat as well, which I enjoy because it has another dimension. Uh, I only ever invest in non-conflicting sectors, so never in uh never in the businesses we're representing. But uh, I like the fact that uh I've acquired businesses, I've operated. But I enjoy what I'm doing now because it allows me the time to really focus on uh I think I think it's I can remain objective so I can stand back and I can see what's happening on both sides of the equation and uh find solutions, as I said, rather than operate, you're in the thick of it. Yeah. Acquire, you gotta kind of calm your nerves and when do you hold?

SPEAKER_00 39:57

When do you find okay? So different hats at different times, four hats. It's an impossible ask, but if you try it, if you forced yourself to compress all of that perspective into here are the top three things that a commercial growth stroke profit-minded clinic leader, be that of a single site looking to sell, of a multi-site looking to buy, here are the the one, two, threes, the A B C's of these different perspectives coming together that you think of as the true North. I'm not exactly sure what lives on that list, but if you had to compress those different perspectives into not the non-negotiable one, two, threes, do you have a sense of what those would be?

SPEAKER_02 40:51

Perhaps we won't answer it in the way you're looking for, but there are certainly some mindset shifts that I think need to happen. And that's just looking at the various perspectives. So I think there's a lot of buyers out there who have got a very tightly defined strategy, which isn't a bad thing, uh, but are maybe less opportunistic with what could be a potentially great company to buy, and they're missing out because they're trying to stick within a box too much, and I see that very often. I also see the opposite. I see people that will just grab at anything, scatter gun approach, and they've got no defined strategy. And that was me, by the way, when I originally started building it was I've got no no plan here, I'm just gonna deal, make, see where it goes. So I think it's avoiding either of those extremes, and this is in the MA world. I think it's have a strategy, have a plan, but don't be afraid to deviate from that where there is a an opportunity. When it comes to non-negotiables for particularly for sellers, is focus on the numbers and the amount of buyers, sorry, the amount of sellers that I work with who present me their accounts from 2024 and they're 18 months out of date, and they've got no idea what their trades being, they're just going on gut feel, they should be scared. And I will back that up with a real life business that I acquired. So I think it was my fourth or fifth acquisition that I did, but I found a really great company at how much the turnover was, but it was over a million, under two. Good company, good reputation. And I looked at it, we saw numbers, made an offer. The at the time the owner had no idea they had no PL, they had no idea how their business was running, and the accounts were sort of 12 months old. The only way that they knew that their business was doing well or not was because they had cash in the bank and they could pay everyone at the end of the month. That that was it. Really, you know, quite quite a scary position to be in. I managed to get the data out of them and analyse it, and I could see the business was insolvent. Uh, and it was because the owner was uh lost a load of staff, which is a very which is very stressful and it was really hard to recruit, particularly at that time, and they'd basically filled the business with loads of expensive locums, not associates, but locums paid silly hourly rates plus VAT through a umbrella company. And the offer that I made for the business went from here's my good six-figure offer overnight to uh I'm gonna have to shave this by 75% and make a load of your team redundant. And that was probably one of the hardest things I had to do in business. That was I whenever I've bought businesses, I've always tried to uh even if there's been surplus staff, my view has always been if they're not if they're surplus to requirements. And people leave within the business, I will allow them to go through natural attrition, but I wouldn't look to make them redundant. I would always look to try and find roles so that we could scale the business. That was always my mantra. I never think it's a good idea to go into a service-based business and cut people. But this was the only business that I did that with, and I had to. It was the only way to preserve the company. But that all could have been avoided had the numbers been reviewed six months, twelve months, eighteen months earlier, because the owner would have known the direction the business was going in and could have made different decisions. So I'm always looking at businesses at the point where they're looking to sell, but you need those numbers to run a business. And I remember when the early days of building up my business, we'd have to have a two or three month lag to get management accounts. And even that, the amount of things that could happen, go wrong, you could overspend in three months, especially at scale, if it's a hundred thousand pound business and it's you, it problems are smaller. But when you're a million, two million plus turnover, those problems compound. You give everyone a small pay rise at the same time, and suddenly you're out of business. So yeah, keeping an eye on the numbers is a non-negotiable for me.

SPEAKER_00 45:19

I think a lot of people have heard that and in their seat can't shouldn't notice it. But no, fair enough. Okay, interesting. Okay, I buy that. So now we're you're in the market, you're facilitating. Obviously, something very interesting is happening right now. We are in this technological moment. Some people are very excited about it, some people are very unexcited about it. Everyone has an opinion, so be it. Put me in the excited category. You are in the excited category. Absolutely. I'm a real tech geek. Technooptimist. Okay, fine. Technooptimist. So then you're excited. So one of the things that we have found in engaging with clinic leaders is that they know something's different this time around or it feels different. Not another workflow automation tool, but something that gets them a bit further. And there's this quasi-paralysis of this is how I've done things for however long. Now I need to pull up the roots of the tree and plant something else. And it's a big ask. It's a really big ask. And we see, at least in the clinics that we work with, there is this I'd be so bold to say, split down the middle, where people are either hungry for or completely head in the sand about. We don't find many people who are, with the exception of maybe one or two, actually, to this person's credit, he said in an email response to me, I know I'm not an early adopter, but I'm just behind that wave. So I'm just hanging out a little bit to see what comes, but I'm very focused on it. That's very rare for us. We almost always see either extreme. Yeah, either extreme. Because I think it takes I think you really need to know yourself as a clinic leader to say, where am I on the adoption curve? I don't think that's very common. Needless to say, we see a lot of extremes. Both ends are getting totally burned right now for different reasons. The early adopters, who are really early adopters, as soon as you've jumped into the wrong ones. AI receptionists came on the market, everybody went up like a blaze and started implanting it. We have heard no some have had a good experience, many have had the worst of the worst, firing people, then having to rehire people, then upsetting customers. It's been a total mixed bag for the early adopters and for many of the late adopters, they're seeing this from the stands and saying, I'm getting whiplash on the pace of change and all that. So I'd be curious in the conversations you're having with buyers, with sellers, as in wearing an investor hat, wearing a facilitator hat, what is the temperature that you feel in the room around technology adoption, workforce? The whole narrative now is workforce transformation, less people, more output, or same people, more output. What is the temperature in the room for you? How focused are people on leveraging what is newly possible? Are they scared? Are they excited? Are they both? What are you feeling in your conversations?

SPEAKER_02 48:28

I definitely think there's a level of intimidation, and I can resonate with that. So wearing my investor hat, I get approached regularly by every different guise of AI company in the health world saying we're revolutionising that. And I must say, I'm approaching a lot with a degree of scepticism, and I think that's important. And I'm sure you might be sharing that when we first met, I thought, great idea, but uh I don't really understand what you do or what it is. And but I've quite quickly come round to the idea that there are certain companies out there that are doing a good job and genuinely adding a lot of value to to uh to this sector, and I think they are the ones that are picking up clients, showing momentum, showing real value. And there's a lot of I don't want to say pretenders out there, but there's a lot of people that in a back room have maybe made a bit of a sort of plug-and-play AI app and uh in yeah, exactly. Yeah, I don't know how you describe that. But so yeah, so from an investor point of view, I've certainly taken the time to really try and understand uh the underlying tech. One of the best things I did actually was, and again, I still feel behind in the AI boom, but I did a uh a short course at Oxford University, which was foundations in AI. Didn't teach me how to do AI or make AI or code, but it gives you a really idea, a good idea about uh how long things like AI has been around, and it's I think from the 1950s, it's not a new concept, it's just been there, there's been various explosions uh throughout the past 50, 60, 70 years. And uh I think it's the it's the generative AI that's out there at the moment that's really uh got it on everyone's radar. Um in terms of the clients that I work with, a lot of them are probably of the mindset of, well, bear in mind I see people that are about to sell, that they're at that point where they say, Well, I can see there's value in some of this stuff, I can see it's probably worth changing, but we're at a point where we want to sell, they just don't have the energy dry, whatever it might be, to actually go out and make those big changes. And I think if you're putting it on the market tomorrow, do you really want to go out and invest a load, disrupt your own? Or if three years out, four years out. Well, even if you're a year out, two years out, I think you could quite quickly get left behind if you don't adopt the right technology. So I think my key message is look, don't jump into wins and fads, which I know physios do have a tendency to do and have done throughout the years. I think take time to properly assess opportunities, but don't get left behind because the pace at which technology is moving and uh the impact that it's having on the clinics that are adopting it are significant. Again, we are seeing the those generally looking to exit. We're probably not seeing those that have adopted some of the kind of early technologies and are showing the benefits of that yet. But I fully expect the next year or two to see that. Yeah, I think if we're having a couple of the conversation in two or three years, we'll see different things, performance will be different, yeah, multiples will be different. Exactly.

SPEAKER_00 51:54

Interesting. Yeah, I'm just trying to think here. Most of the work that we do is it's all in private practice. I'm trying to think if I have like a benchmark for And I know that at Averilla you you do not just MSK, a large footprint in MSK, but I know you do medical aesthetics. And if you do dental as well, it's one of the sectors we haven't got touched.

SPEAKER_02 52:14

It felt very mature as a you would take on dental practices, and we've contemplated going into that sector.

SPEAKER_00 52:20

Your buyer base may not be there yet.

SPEAKER_02 52:21

Well, I think we we have got the buyer base because interestingly we've got a lot of aesthetics buyers who want to buy into dental and vice versa. The reason we haven't pushed it is because we know that we're adding a lot of value into the unconsolidated, fragmented markets aesthetic medicine, podiatry, physio, chiro, osteo, psychiatry, whereas there's already an established consolidation and measure.

SPEAKER_00 52:45

Yeah, it makes sense. It it I'm trying to think if in our practices that we work with, is there a general mood in the room that's different between those different subsectors in terms of technology adoption? I don't know that there is. I think what's very different, and actually we had someone here who comes from a dental MA background and now an MSK to MA background not too long ago. And his big thing was in dentistry, you have a much better educated market because of the fact that it's more mature around what it means to get ready to sell. And oftentimes that comes with a pure network of people that you went to dental school with who have already done that. There's a you're four years out, now start doing this. So it feels like to your point, unconsolidated, fragmented, that that almost market education piece is starting maybe to happen more in the unconsolidated parts of the market. Really interesting.

SPEAKER_02 53:39

Which is quite interesting. I've seen a lot more happening in terms of business conversations and the sort of commerciality of running a clinic recently. Oddly enough, I saw someone in my network post about exactly that point this morning saying, is it just me or are there more business conversations happening? Organizations like Physio First are doing a lot more business education CPD days, which I think is a great thing. I think for too long clinicians have tried to just stick it being clinicians, but if you are running a business, you need to understand what is required of running a business, whether that be the financials, whether that be about assessing the right technology, how are you going to run your practice, how are you going to make it fit for the future? Changes in HR law, actually. Exactly.

SPEAKER_00 54:29

Yes. Everyone's going to have a field day with it.

SPEAKER_02 54:31

Every year at the minute. But it's quite a fast-pac-paced environment, whether it's tech or whether it's political, which we'll avoid for today's conversation. But yeah, certainly I'm seeing more conversations happening.

SPEAKER_00 54:43

Around that. Around that as a topic, as a beachhead topic. It's interesting. The uh so again, not coming from a healthcare practitioner background, but having accidentally found my way into healthcare and starting in medical device development, so tangentially in healthcare provider operations, but then ultimately running a clinic. It was so interesting to me then because I remember the first time I started really engaging at a professional level with healthcare providers when we was when we were going through clinical trials and we had to have key opinion leaders review our clinical trials data for a laser that we were developing. And so we were working with a lot of dermatologists. Many of those dermatologists were, by virtue of being a key opinion leader, very established, etc. And all but one, I think we were working about a panel of 12 or something like that. US and Europe, UK included at that time. All I think all but one were running their own private practice. And it was amazing to me how the contingency of key opinion leaders from the US, which obviously is a much more developed healthcare market, much more commercial healthcare market, the proficiency and business-y thinking was so much more established there because I think many of them had been running private practices or groups and had gone through the market transition that you're describing. And I guess here for obvious reasons, NHS, et cetera, it feels like there are these waves of privatization that are happening. And I guess the question is, what are the different market forces that get that conversation started? Because I haven't been in MSK or in market long enough to know. But the fact that you, as someone who knows the market back to front and other people in your network are saying, hey, there's this new cool thing, let's talk about the business, is really interesting. Do you think that if you imagine in 12 months' time, the world may be entirely different in 12 months' time, depending on what OpenAI and Anthropic decide to do, but let's just imagine that things don't change dramatically in the course of the next 12 months. What do you think that conversation sounds like? Imagine speaking to a seller or a buyer in 12 months' time.

SPEAKER_02 56:58

So I think the big thing at the moment is the economic pressure on small businesses is very much driving the business conversation. And I think that is going to drive adoption of technology, whether it be AI or other, that creates efficiencies within that business. And it's not about removing the human element. I think it's very much about how do we deliver more, how do we stand apart, or how do we do things more efficiently. It's about adapting and surviving. And I think Yeah, it's a product of the economy that we're in and the pressures that people are facing. And I think all small to medium-sized businesses are under pressure. Thankfully, healthcare is probably less affected than hospitality and other businesses, but there are still real pressures out there, and everyone I speak to, small businesses through very large businesses, they're feeling that pain, they're feeling that pinch. And I think that's gonna that that's what's driving this uh conversation around commerciality and running a business as a business and not just as a lifestyle business.

SPEAKER_00 58:04

Interesting. We have an event coming up on the 18th of June. You will be there helping us to I will. I'm very much looking forward to it. Enchant the crowd, etc. But it'll be interesting because I think most of the people joining will be either on the buy or sell side, with a few who are sort of ecosystem, which I think probably at least right now, more so the hats that you wear, the role that you have in the ecosystem. I think it would be really interesting to surface some of these things then, so I hope we do. And equally, I find myself wondering if we had a buyer and a seller in this conversation right now, listening to some of the things that you're saying around this is economic pressure, adoption of technology, efficiency, transformation, etc. Do you think they're sitting there going like this, nodding along, saying, Yes, I agree? Or do you think that to your point earlier, when you're sitting on side of it, you have the benefit of refereeing and seeing the field, whereas if you're in it, you're playing the game, you don't see it. Do you think that horizon scanning is happening on the clinic operator side?

SPEAKER_02 59:09

I think people are becoming more aware of it, but I don't think that it's quite hit home yet. Yeah, I think it's going to be six, twelve, eighteen months down the line before many people in the sector have their light bulb moment of, yeah, we need to make a change, we need to do this, we can't keep doing what we're doing. It's probably quite similar to the adoption of, or rather, move away from paper notes. That has been a for a lot of people a real sticking point for many years, but you just wouldn't dream of not having proper medical records these days. It seems so inefficient.

SPEAKER_00 59:45

It's interesting. You can imagine not at all, and then all at once is the sort of thing where you have that the sort of the mass market who will maintain a position of there's a lot of resistance. It's on the results. It's amazing. So the whole house goes at once.

SPEAKER_02 1:00:01

Interesting. Online booking was another one. Uh and again, part of that there wasn't much of a solution. But I spent years uh fiddling around with workarounds and plugins and APIs just to get what I thought was a very basic function that other industries benefited from already into the sector. Uh, and again, a lot of people didn't bother with that, didn't bother with that, and then suddenly it's just a norm. So I think we'll probably see the same with some of these um newer technologies in the marker.

SPEAKER_00 1:00:29

Yeah, just a closing thought on online booking. I gotta tell you, a lot of people offer it, it's still terrible. Well, yeah. It's I don't disagree. It's really terrible. It's there, yeah. But I always use the reference point of it's amazing to me that Amazon have figured out how to deliver me exotic pea protein powder and sandals with one click in 24 hours, but I can't get through my online dental hygiene booking or physio appointment without 46 clicks, multi-time multi-time logins, and some other weird.

SPEAKER_02 1:01:03

Whatever nobody actually puts themselves in the patient's position. And I must admit, even when I was implementing it, you're looking at it from a how can I implement this? How can I make it work with my software? But now that I don't have to think about that, but I do occasionally use it, I want to book a massage or a physio appointment or something else. The amount of times that I have gone onto a website to try and book something and I've just given up because I completely agree. All I want to know is do you have something tomorrow? I don't want to choose the location first. I don't want to pick my practitioner because I have no idea who any of them are. Next car, yeah. So we wouldn't Can you see me tomorrow? And you know, and then do I like the look of that person and what's their qualifications? Everyone seems to get it the wrong way around. It's it's remove some barriers.

SPEAKER_00 1:01:50

Yeah, that's that's the word barriers. It is we hear a lot from the practices. We'll ask them because we do a lot of work on inquiry, conversion, lead conversion, and we'll say how many patients reach out to you to try and book an appointment. What happens to those patients? They'll say very proudly, Oh, the majority of our patients will book online. And I hear that, and the first thing that goes to my head is, okay, cool. So you're losing 50% of your patient flow in online booking. That's why you tell me everyone's coming through the front door. My assumption is that half of them aren't making it through for that exact reason. Because who can stomach this side, that side? Oh, I can't go to that side on Saturday because I'm working and then I have to go there. Life is too short to do online booking.

SPEAKER_02 1:02:26

Make it easy for your service user.

SPEAKER_00 1:02:28

100%. Doc, thank you so much. I think having the different perspectives here, we're trying to bring together different voices. We have respiratory physicians coming on, we have neurologists coming on, we have clinic owners, clinic buyers, clinic transaction facilitators. Very rarely do we get someone who can hit it at all angles. Now that you're with the sort of Verilo mission, I hope that the technology wave unlocks a lot of activity in your world. I'm sure you will tell us if that is or is it the case? I'm sure it will. But it's been wonderful to have you. Thank you so much for sharing your story, your entry into the space, and looking forward to seeing you on the 18th. Thank you. Much appreciated.