In September, Progeny Health entered its 16th year in business, and for 14 of those years, Dr. Ellen Stang, founder and CEO, was the only investor. Today, the company has approximately 210 full-time employees, works with some 1,400 NICUs in all 50 states and has experienced 80 to 100 percent growth over each of the last two years.
“We've been profitable since day one,” Stang says. “We have no debt, and we have strong margins that have been historically very consistent.”
But getting there wasn’t easy.
“It was 2011, eight years into the business, when I hit a wall,” Stang says. “I couldn’t get out of my own way. I saw a tremendous market opportunity, and I just couldn't seem to get there. I had about 20 employees and was putting out fires, working in the business and not on it.”
At the Dealmakers Conference earlier this year in Philadelphia, Stang spoke about how connecting with a PE firm set her company up for growth in the years to come.
Not a do-nothing kind of gal
Some advice led Stang to seek help from a strategic advisory firm. After a search, she landed with Falcon Capital Partners, which, among other things, began friendly conversations with PE firms.
“I was very impressed with the PE firms that I met,” Stang says. “They’ve seen the entrepreneurial story over and over again. There are so many smart people out there that I believed would really be the key player that can help us scale and reach our potential as a business.”
In 2017, Stang and Progeny were faced with a decision. The company’s four options, she says, were to find a strategic buyer, merge the company with another, keep the existing operating team and find a growth partner, or do nothing.
“I'm not a do-nothing kind of gal,” she says. “So I went with option three and went out to find PE firms.”
Big decision for a bootstrapped entrepreneur
In her search, Stang was looking for specific things. She needed a PE firm that was very experienced in her tech-enabled health care services businesses, that understood that market and could help her rapidly scale. She was also looking for cultural fit.
“You meet group after group after group, and there has to be a good fit with your organization or management team because these are people you're going to have to work very closely with.”
Lastly was a fit with the firm’s vision. That’s what ultimately sold her on Sunstone Partners — its vision for her company.
With the decision made and the relationship under way, the PE firm dove into Progeny’s go-to-business strategy. It also helped bring great hires into the business, including a president, which enabled Stang to become CEO, and helped her think about the adjacencies of the business, leading to the company moving into new areas of business over the last year. Progeny, with the PE firm’s help, is also actively looking at acquisitions.
Stang says getting help from a PE firm was a big decision for a bootstrapped entrepreneur.
“But I’m a year and a half into that now, and it’s one of the best things we ever did,” she says. “I have a fantastic partner. They helped me avoid a lot of mistakes, and entrepreneurs that come to me today, I'm very supportive of the right PE firms because they are a game-changer.”