MSO/DSO PE Roll-Ups, Search Funder Success Story: A DEEPER Dive: "The Power of Networking"
This Week On How2Exit, Chatting With two experts, one on MSO and DSO, and the other a Search Funder Success Story - DEEPER - "The Power of Networking: Building Strategic Partnerships to Expand ---
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This week on How2Exit:
Eric Gall is the founder of Edison Business Advisors, based in Florida. He started his career in the late 1990s at Ford Motor Company, where he did post-merger integration work with several car companies. In the mid 2000s, he joined with some friends to form a private equity group and purchase seven businesses in the automotive services, transportation, logistics and software industries. When the Great Recession hit, Eric was left managing the businesses on his own, and had to make some tough decisions. With the money tightening up and the rising cost of materials such as oil and tires, Eric had to make the decision to hire people to run some of the businesses.
Eric James Gall is an experienced business broker who started his own business, Edison Business Advisors, in 2014. He helps people buy and sell businesses in the lower middle market, ranging from $1 million to $25 million in enterprise value. He specializes in medical-related businesses, such as dental practices, medical practices, and medical billing businesses. He also works with service-related businesses such as AC contractors, drywallers, remodelers, and electrical contractors, as well as lawn and landscaping companies. His buyers are primarily those within the profession, such as dentists, chiropractors, and doctors. However, he also works with outside buyers such as DSOs and MSOs.
The conversation is between Eric James Gall and Ronald Skelton. Eric is discussing his work with dental service organizations and medical service organizations who are rolling up practices. He notes that there has been a shift in the attitude of recent graduates when it comes to entrepreneurship, with many opting to work for someone else rather than start their own practices.
Eric James Gall and Ronald Skelton discussed the topic of dental service organizations (DSOs) and medical service organizations (MSOs). It is not possible for someone who is not a dentist, chiropractor, doctor, or veterinarian to buy a practice in most states unless they set up a DSO or MSO. The two talked about how DSOs take on the full spectrum of care for their employees, but cannot tell them how to treat patients. Eric then shared that the DSOs look to buy practices with at least half a million dollars in EBITDA, and that it costs around $60,000-$80,000 per operatory to set up a practice. (53:26) Listen Here
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Carlos Rodriguez Laconi is an international entrepreneur with his first exit behind him. We recorded this show while he was in Salta, Argentina where he is temporarily escaping the cold winter in Boston. Carlos started his business in North Argentina, leasing farms from the farmers and producing soybean, corn, and other commodities. He then followed the trend of natural and organic food and started producing chia seeds, which became the company's main product and was exported to Europe and the U.S. Carlos's exit story was an inspiring one and one that shows the potential of entrepreneurship.
Carlos talks about his experience with starting an organic farming business in 2009, followed by his journey to the US for his MBA. His roommate in the US introduced him to the concept of search fund, where an entrepreneur buys a small business. He completed his MBA with a concentration in entrepreneurship and interned with Search Fund Accelerator. After his MBA, he wanted to raise a fund and searched for investors, but was unable to do so due to his visa. He then decided to do the search in Argentina, where he is an economist and knew all the country's issues.
The speaker was originally looking to invest in Argentina through a search fund, however the country's economic instability made it an unviable option. Instead he decided to open a subsidiary in the US and started importing his products while expanding into Europe. In 2020 he received a LinkedIn message offering him the role of CEO and General Manager of Boston Tree Preservation, a company founded in 1977 by an arborist. The company specialized in organic plant healthcare and the speaker had no knowledge in that area.
In 2020, the speaker joined Boston Tree Preservation, a company that provides organic treatments for trees in the wealthy north shore areas of Boston such as Arlington and Belmont. The company was attractive to the speaker due to its low customer concentration, recurring revenue, and long-term customers. The company's value proposition of providing organic treatments to maintain healthy and long-lasting trees was particularly appealing in a city like Boston, where many trees are over 50 years old and represent a large value to property owners. The company's goal is to help these older trees live longer and healthier lives, up to 80 or 90 years.
Carlos took this company to exit, completing his first search to exit experience and we talk about what that’s like and what he is looking for next. Watch here: (50:11)
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This week’s “DEEPER” Dive: "The Power of Networking: Building Strategic Partnerships to Expand Your Business"
Not only is networking great for finding a business to acquire but it’s also go for finding strategic partners that can help you grow. In this article, we are going to primarily focus on growth via strategic partnerships.
Let’s dive in.
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