Mark Kaufman's goal was to open one Athletico PT orthopedic rehabilitation clinic in Chicago, which he did in August 1991. Now, having just passed company's 30th anniversary, it has more than 550 locations and employs more than 4,500 people.
"We blew through every goal I ever had," says Kaufman, the company's founder and executive chairman.
The company had healthy growth, reaching 60 locations organically in multiple states by 2010. But it was around 2014 that and his partners recognized that other physical therapy outpatient groups were growing at a faster pace.
"They had taken on private equity capital," he says. "They've grown at faster rates. We were growing organically with very little debt, just growing off our cash flows, and we were very comfortable with that. But when we saw groups in our market where we felt we not only competed but we were better, and we saw groups around the country growing, we had to check in with ourselves and say, 'OK, gang. Do we want to do this? You want to compete at that level?'"
The company had never done an acquisition, but made the decision to compete, believing that they could take the company to a higher level. So, in 2014, the company made its first acquisition with the help of its first partner, Harvest Partners out of New York.
"We acquired Accelerated, a group in our market, and just imagine this — it's not something I'd recommend on the M&A front — but we had approximately 1,500 employees, 100 locations, we acquired Accelerated and they had 246 locations and 2,500 employees, and that's the first time we did an acquisition. So, I'm surprised I'm still sitting here. I'm surprised I have any hair left."
Kaufman says the company gained a lot of great human capital with that acquisition, as well as locations in the surrounding states, which accelerated the company's growth.
But going from 100 to 350 locations essentially overnight is not something Kaufman recommends for everyone.
"There's not enough time in the day to talk about the learnings I had. Looking in the mirror and asking myself, Am I the person that's holding back this business? Having the courage to lead through that and go into all those markets."
He says what he hoped to find through the acquisition was to see what Accelerated does well and compare that to what his company does well and then find the right path.
"What I found was there was about six or seven or eight different cultures going on, different ways of doing things. And so then it became a bit more of a fire drill, which you never want. First acquisition, the leadership wants to show well, and you don't want to come off in a way that creates any type of problems between the field and the resource center, the corporate offices."
He says a lot of good things came out of that. Not only the different territories, but more of the human capital and the relationships with the people leading the respective organizations that Accelerated acquired, and the relationships that they had with their referral sources, their affiliates and their payers in the respective market, was something he says he and his team worked hard on.
"We worked hard with the people in the markets that has created all those relationships because, at the end of the day, it is a relationship business."
Kaufman spoke at last year's Chicago Smart Business Dealmakers Conference about the M&A lessons he's learned in his more than 30 years with Athletico PT. Hit play on the video above to catch the full interview.